My friend Andrew Bailey will be a sterling governor
Rarely do public roles go to the right person – but the new head of the Bank of England is a perfect choice
On Friday, a fellow journalist asked me: “Have you got any good anecdotes about Andrew Bailey?” She had heard that the new governor of the Bank of England and I were at Cambridge together 40 years ago and have been friends ever since. When I told her I didn’t I feared I was making him sound like a humourless bore, which couldn’t be further from the truth. It’s just that Andrew is the type who doesn’t behave in the pyrotechnic way that breeds anecdotage; and that is why he will make a first-class governor.
The important thing about him, from the point of view of the economy, whose health or otherwise will rest on decisions that he will, from March, take the lead in making, is that he doesn’t get into scrapes or express views that lead to a fund of stories being told about him. He epitomises the sort of attitude to banking that for decades gave this country a reputation for sound money and sound finance; he has certainly never, unlike rather too many people who work in the Square Mile, regarded the financial sector as some sort of high-class casino, where gambles are made on where markets will be moving from one split second to the next.
For him, the central bank is the lender of last resort, and as such it expects all the clearing banks to behave responsibly – as, with the system of post-crash stress tests, they now do. In his past two jobs – since 2016 as chief executive officer of the Financial Conduct Authority and, for three years before that, as deputy governor of the Bank, in charge of prudential regulation – he has made himself the country’s leading expert on the regulation of financial services, and has done much to ensure that the circumstances do not again arise where people are queuing up outside building societies to withdraw their capital out of fear that institutions could collapse.
He will also chair the committee that decides on the level of interest rates; and it is here that his acute intellect will come into play. An economic historian by training, with a PhD from Cambridge, he understands the way economies have moved, and why, not just during the 35 years he has worked for the Bank but throughout the modern period, here and in the developed world. His own experience, particularly as chief cashier of the Bank during the turbulence of 2007 and the crash of 2008, will join with his temperament to ensure that any storms that come along are met with calmness, resolve and, above all, good sense.
Unlike Mark Carney, his predecessor, he does not seek the limelight, or see himself as a political player. I should be amazed if he engages in the sort of activities Mr Carney occasionally has, in appearing to predict movements in interest rates and, indeed, to make pronouncements or observations that appear either quasi or overtly political. Andrew learned the art of central banking from “Steady” Eddie George – whose chief aide he was when Lord George was governor – and Mervyn King, neither of whom had exhibitionist tendencies and who knew when to keep their mouths shut.
I am not sure what Andrew’s politics are now: at Cambridge he ran the Fabian Society and had views one would now describe as New Labour, 15 years before the term was invented. He has kept out of politics since then and will act with scrupulous impartiality in his job, as he has in everything he has done since he joined the Bank. It was comical that, when he was appointed on Friday, some people talked about his having secured the appointment because he would give the government no trouble over Brexit. I have no idea whether Andrew voted Leave or Remain, or indeed whether he voted at all. What I do know is that he will note what the policy of the elected government is and will do everything he can to ensure that the central bank’s role in its execution is carried out to the letter – and that if any difficulties arise because of it, and are within his sphere of operations, he will draw these privately to the attention of the Treasury and offer solutions.
He has years of experience dealing with politicians and officials in Whitehall, and there is great mutual respect between them. If anything other than a period of calm and stability in our financial affairs results from his stewardship of the Old Lady of Threadneedle Street, I and all his other friends would be amazed. It is rare these days that great public appointments are actually filled by the person most able to do them properly, but Andrew Bailey’s promotion is one such rarity.