After Carney’s long time in charge, the City will want a safe pair of hands to replace him.
Mark Carney is known as the George Clooney of central banking. It is easy to see why. His winning smile, transatlantic accent, even his penchant for music-festival chic – he memorably donned glitter at the Wilderness festival in 2016 – have all served to reinforce what former Canadian colleagues term his “star quality”.
The glamorous governor of the UK’s central bank will soon depart, however. Originally due to leave this year, his five-year term was extended in an effort to help secure “an orderly transition to the UK’s new relationship with Europe”.
“Carnexit” is now penned into City diaries for June 2019. Speculation is mounting as to who will take the helm at Threadneedle Street in the absence of his Canadian charm.
Regardless of his rock-star status in the bone-dry world of central bankers, Carney has had a controversial tenure as governor.
Taking a negative view on Brexit was one of his most hotly contested steps.
In November he said that the UK economy would be booming if it were not for Brexit, and ahead of the in-out referendum he made clear his view that quitting the European Union would have a negative impact on growth, provoking outcry from senior Tories including Michael Gove and William Hague.
Taking the Bank of England out of the “political quagmire” is a priority for his heir, according to Karen Ward, formerly of Threadneedle Street, now chief market strategist at JP Morgan. And not just because of Brexit.
Unwinding the £435bn built up through so-called money printing, the creating and buying of bonds in order to boost liquidity in the wake of the financial crisis, will be a titanic task. No UK governor has tackled this challenge before. Reducing the Bank’s balance sheet is set to happen at a time of stretched government finances. Offloading, or at the very least halting, purchases of billions of bonds and normalising interest rates will also have to be balanced against the fallout from leaving the EU.
“Short term, that [raising rates] would be the thing keeping me up. I’d be worried that I’d raise rates in May and by the course of the summer the negotiations are proceeding not quite so well. That would be, if you were Bank governor, your worst-case scenario,” Ward says. Such political and economic uncertainty makes it unsurprising that several City bankers told The Sunday Telegraph that they are pinning their hopes on an internal candidate who could minimise disruption.
Within the Bank, the likely contenders are entirely male. While it might reassure the City as the UK embarks on its new course, their appointment would do little to address criticisms of the Bank’s lack of diversity, given its almost entirely pale and male hierarchy.