Was he a rock star Governor – or an unreliable boyfriend?
As Mark Carney prepares to leave the Bank of England, our City Editor looks back over six tumultuous years and asks . . .
Mark Carney’s six traumatic years as Governor of the Bank of England will finally end in March, after three postponements.
It is not an entirely smooth exit. In December he was confronted with details of how eavesdroppers took advantage of a technical breach to secretly listen into, and trade on, his pronouncements on interest rates and the economy.
He did, however, get off to a promising start when, to much surprise, he was plucked from the relative obscurity of the Bank of Canada by Tory Chancellor George Osborne in 2012.
The selection of Carney, now 54, to arguably the most important job in Britain outside Number 10 brought a sound reputation and a banker with a trimmer, balding George Clooney look to the job held by the owlish, intellectual Eurosceptic Mervyn king.
Carney was hailed as the banking equivalent of a rock star. Certions tainly, Britain needed change, but Carney is a divisive figure.
He can be chippy when his judgement is questioned and has a tendency to veer off into incomprehensible technical jargon. Political interventions in both the Scottish referendum debate (on the side of the union) and his perceived support for remain have been interpreted as a distortion of the Bank’s cherished independence.
On the issue of providing certainty to consumers and businesses on the future direction of interest rates, frequent zig-zags earned him the unwanted sobriquet of the ‘unreliable boyfriend’.
His speeches about climate change, a cause dear to his wife Diana, led critics to wonder what that had to do with inflation and setting interest rates. But they have proved prophetic. Carney, in the company of his wife, was seen quietly visiting the disruptive Extinction rebellion demonstra
in 2019. His new job is as UN special envoy for climate action and finance.
His knowledge of financial markets is intimate thanks to his former role as chairman of the Financial Stability Board, which was asked to restore confidence after the financial crisis. as an ex-trader at the investment bank Goldman Sachs, he had seen the menace of bad banking.
The departing Governor squeezed a hard bargain from Osborne, which led to unwelcome publicity over his rewards.
He earned nearly £900,000 last year, including a London housing allowance. and he still managed to run up additional expenses of £300,000 in 2017 alone as he circled the globe first-class at taxpayer expense.
as this paper’s City Editor I have tracked the Governor closely. On his first out-of-town trip to Nottingham, he granted me an interview, saying he wanted to change the way that interest rates are set, to provide more certainty.
as in North america, rates would also be set with an eye to reducing unemployment.
This pledge, like so many others, would fall by the wayside as Britain recovered swiftly from recession and unemployment fell faster than expected.
Instead of providing businesses, homebuyers and savers with valuable guidance, Carney – partly misled by the views of the Bank’s own economists and agents around the country – created a fog of confusion and earned himself the unreliable boyfriend nickname from a Labour MP.
He also put into question the
Bank’s role as an independent arbiter of the economy, through the path he chose to take in the run-up to the 2016 EU referendum. Instead of standing back and letting the politicians fight it out, he took to Sunday TV to line up with the experts predicting an investment disaster and a ‘technical recession’ should Britain decide to withdraw. Like many experts, Carney was wrong on both counts. Investment has been pummelled by uncertainty but not on the scale the Bank forecast. as for recession, the economy may have slowed but it simply did not happen. In fact the jobless rate has continued to fall to the lowest level in a generation, at 3.7pc of the workforce. Carney argues he in fact is responsible for this decent outcome. On the day after the referendum, when the nation was politically paralysed and financial and banking stability imperilled, it was he who appeared before the TV cameras and announced a series of steps to head off catastrophe. More recently, he has redeemed his reputation by becoming the loudest voice in support of the
City, post-Brexit. He argues that, with all the focus on the Customs Union, physical trade and borders, it has been forgotten that manufacturing and traded goods are only a small fraction of the earnings, jobs and employment provided by the financial and services sector.
His pay and perks were nearly £900,000 last year
CARNEY also recognised that some £29trillion of destabilising derivatives contracts would be at risk unless Europe comes up with a deal on financial services and negotiated an accord to minimise disruption.
His achievements also include rescuing the City from those in Europe who resent Britain’s role as the world’s leading financial centre.
Last year the Treasury opened applications for the next Governor, after Carney extended his stay at Threadneedle Street three times to try to ensure a smooth exit from the EU.
By the time he finally leaves Boris Johnson’s Brexit bill will have become law.
His successor, andrew Bailey, also worked on ensuring a safe passage for the Square Mile to the post-EU era. In his years at the Bank and as a top financial regulator Bailey, in contrast to his predecessor, studiously avoided public political positions.
The Carney experience suggests the next Governor might be safer steering clear of TV screens.