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Mark Carney to serve extra year as Bank of England governor www.theguardian.com
Mark Carney has ended weeks of speculation about his future by agreeing to stay on as governor of the Bank of England until Brexit negotiations with the EU have ended in 2019.
Despite being urged by the prime minister, Theresa May, and the chancellor, Philip Hammond, to serve a full eight-year term at Threadneedle Street, until 2021, Carney said he would only agree to remain in place for an extra year. He started in the job in July 2013.
The governor said in a letter to Hammond that he had intended to leave the Bank for personal reasons after five years, but the altered landscape for the UK following the vote in June to leave the EU had caused him to change his mind.
“Since then, my personal circumstances have not changed, but other circumstances clearly have, most notably the UK’s decision to leave the European Union,” he wrote.
“Recognising the importance to the country of continuity during the UK’s article 50 negotiations, and notwithstanding those personal circumstances, I would be honoured to extend my time of service as governor for an additional year to the end of June 2019.
“By taking my term in office beyond the expected period of the article 50 process, this should help contribute to securing an orderly transition to the UK’s new relationship with Europe.”
His announcement followed a meeting with May in which the prime minister gave the governor her full backing for his handling of interest rates and called on him to stay to help steer the UK economy through the post-Brexit vote period.
The public show of support for Carney from the government’s two leading figures reflected concerns that news of his early departure would put further downward pressure on an already weak pound. Sterling fell by 6% in October, during which it was the weakest of 150 global currencies tracked by Bloomberg.
While May and Hammond will be disappointed that Carney has declined to stay on until 2021, they will be relieved that he is remaining at the Bank while the two-year article 50 talks are taking place. May has pledged to trigger article 50, beginning the process of the UK leaving the EU, by the end of March 2017. The pound rose by half a cent on foreign exchanges on Monday following the prime minister’s show of support.
May’s spokeswoman said Carney’s decision to stay on was good news for the UK and would provide continuity and stability while Britain negotiated its EU exit.
However, Andrew Tyrie, the chair of the Treasury select committee, said it needed “a good deal of examination and explanation” and that he would be questioning the governor at a meeting of the committee in a fortnight’s time.
Before the referendum, Carney said he would make a decision on whether to stay on at the Bank before the end of 2016, but he has been forced to make his intentions clear by a flurry of speculation about his future.
This began when May used her speech at the Conservative party conference to question the “bad side-effects” of ultra-low interest rates and the Bank’s money creation programme.
Downing Street apologised to the Bank, insisting that May had not intended to attack the governor, but her comments prompted open criticism of Threadneedle Street and Carney from senior Conservative politicians including the former chancellor Lord Nigel Lawson, the former foreign secretary William Hague and the leading Brexit campaigner Michael Gove.
His critics were unhappy at what they saw as the overpoliticisation of his role in the run-up to the EU referendum. They have also attacked the Bank’s forecasting record and the ramifications of its seven-year stimulus programme.
With rumours about Carney’s future helping put pressure on sterling, Hammond publicly backed the governor and said he would be delighted if he stayed on until 2021.
May’s spokeswoman had made it apparent ahead of the announcement that the prime minister was also concerned Carney might stick to his original plan to leave after five years.
“The PM has been clear in her support for the governor; the work he is doing for the country. It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years,” the spokeswoman said.
Asked whether May considered Carney to be the best person for the job, the spokeswoman said: “Absolutely.”
Responding to the news, Hammond wrote in his letter to Carney: “I am very pleased to hear that you intend to continue as governor of the Bank of England until the end of June 2019.
“This will enable you to continue your highly effective leadership of the Bank through a critical period for the British economy, as we negotiate our exit from the European Union.”
But Sir Martin Sorrell, the chief executive of advertising company WPP, expressed disappointed that Carney would not be staying on until 2021. “One year is better than nothing ... But it’s disappointing that he won’t serve his full term,” he told Sky News.
“Maybe he was a little bit bruised by the criticism, I think unjustified criticism, that he’s been subjected to.”
Published Date:2016-11-01
