Carney must choose,
England bank chief might stay to steady the helm, or might be under pressure to leave
Now it’s Bank of England (BOE) Governor Mark Carney’s turn to choose whether to leave or remain.
As he marks three years atop the UK’s central bank this week, the 51-year-old Canadian will realize his credibility is in question after Britons pushed aside his repeated warnings over the economy and voted to quit the European Union.
That decision not only forces Carney into another round of financial firefighting, but hands a victory to those pro-exit lawmakers who attacked him during the campaign for scaremongering and accused him of favouring the “Remain” side. With Prime Minister David Cameron stepping down, his successor could even be one of those critics.
“Politically, Carney is now in a very difficult position,” David Blanchflower, a former Bank of England policy-maker now at Dartmouth College in New Hampshire, told Bloomberg Television. “Presumably a new prime minister will not be happy — a pro-exit prime minister in the group that accused Carney of trying to push to remain. So Carney’s position is clearly in some question.”
Vitriol from some lawmakers and the worsening economic outlook will now be playing on the Bank of England governor’s mind just as he mulls whether to extend his term by three years or step down in 2018 as planned. Yet Carney, who earlier this year left the door open to an extension, may be tempted to stay to bolster stability and provide continuity through the coming years of negotiation, adjustment and uncertainty.
Still, the pending arrival of a pro-exit government and potential departure of ally Chancellor of the Exchequer George Osborne may also push Carney to stick with the earlier departure date if there isn’t some mending of fences. Boris Johnson, the bookmakers’ favourite to succeed Cameron, publicly criticized Carney during the referendum campaign, while others accused the bank of “startling dishonesty.”
If that backdrop taints relations with the government, it could mean Carney’s future is not in his own hands.
“I think it’s very unlikely but there’s absolutely nothing to stop a new chancellor or a new prime minister calling him in and saying ‘We want a new face’,” said former bank deputy governor John Gieve. “I actually think that the new leader will want to bolster his own credibility in the markets by cooperating and collaborating with Carney.”
In what may be an attempt to heal any rift, Johnson backed Carney in a column in the Telegraph newspaper, saying the economy is “in good hands.”
“Now that the referendum is over, he will be able to continue his work without being in the political firing line,” Johnson wrote.
Other prominent figures in the “Leave” campaign may disagree. Before the June 23 vote, Conservative lawmaker Jacob Rees-Mogg accused Carney of compromising the bank’s independence and said he should be fired.
His fellow party member Steve Baker queried whether Carney’s former employer, Goldman Sachs, had encouraged him to warn on the risks of leaving the EU.
“I don’t think the governor of the Bank of England behaved in an independent manner during this campaign at all,” UK Independence Party leader Nigel Farage said in an interview.