We’ve got your back over Brexit

As deadlock in Westminster leaves business in despair, Bank governor pledges...

Mark Carney is on a mission to dispel the Bank of England’s elitist image. He says he wants to get rid of the idea that to be governor you have to be a posh male economist – though in the past it has certainly helped.

‘When I go to schools, I always make the point that if I, who was born in the arctic Circle and went to state schools in Canada, if I can be governor of the Bank of England, then why can’t you?’

He also says he wants to speak in ordinary language people can understand, though he concedes he doesn’t always manage it.

So in the spirit of plain speaking, does he have a message for families and small firms about Brexit?

‘The message is: We’ve got your back on the financial system. The banks, the insurance companies, the infrastructure behind these markets, they have been preparing since the referendum.’

I’ve caught up with Carney in between two visits he is making in East London. The skyscrapers of the Square Mile are gleaming in the February sunlight, but there is still plenty of poverty and deprivation in the council blocks close by.

He has just talked to the children at a nearby school and is about to attend a meeting of residents in Tower Hamlets to discuss their concerns over their debts, their mortgages and their savings.

His home turf at the Bank, a three-acre site on Threadneedle Street, is a world unto itself. It is a maze of corridors with grand mosaics, Persian carpets and imposing portraits of former governors. The heavy doors are attended by men in top hats and pink frock coats.

‘It is very easy to forget the people you are serving,’ Carney says. ‘That is part of the problem that led to the financial crisis.’

One of the school children asked him how he would restore trust in experts.

‘I said, get things right’, he says with a wry laugh – perhaps his way of acknowledging the Bank’s own forecasts haven’t always been bang on – and ditch the jargon. ‘It is a challenge to all of us, myself included, to speak more clearly, be plainer, be more accountable.’

HE read economics at Harvard, the elite US university, before a stint as a City trader followed by post-graduate studies at Oxford.

In a break with tradition, the Bank is hiring more non- economists, with around half its graduate recruits having degrees in humanities or science.

It has also started taking on young people from universities beyond the traditional Oxbridge recruitment grounds.

Carney has been governor since 2013, during one of the most turbulent periods of the Bank’s 325-year history. He began his career at Goldman Sachs and spent 13 years there before becoming governor of the Bank of Canada, which under his stewardship was one of the few major economies to escape the worst of the financial crisis.

and although he says the Uk banking system is in good shape to cope with Brexit, he points out there has already been a marked effect on the economy.

In particular, there has been a big fall in business investment, with firms delaying decisions to spend large sums on machinery or equipment.

The official figures show a drop of 3.7pc, but Carney says there is a much larger fall in comparison with where it would have been without the Brexit uncertainty.

‘It is down 20pc actually, relative to where it was going to be before the referendum,’ he says. ‘It is huge. and it has an effect ultimately on the productivity of those businesses, which means it has an effect on future employment and wages.’

That equates to around £40bn of investment businesses would have made if the referendum had never happened or had gone the other way.

and he freely admits there are limits to what the Bank can do to ease the effects of a hard Brexit – one with No Deal and no transition period.

‘We will do what we can, subject to keeping inflation low, to support the economy as necessary. But we have to recognise the limits of this,’ he says. Carney couldn’t have known what he was getting into when he accepted the then chancellor George Osborne’s overtures to become governor.

It made him the first non-Briton to hold the post, though he now has British and Irish citizenship.

He has had his fair share of being a target in knockabout British politics. He has been mocked by hardline Brexiteer Jacob reesMogg and lambasted as a key player in Project Fear.

His pay of nearly £ 900,000 a year, including a £250,000 housing allowance, has also earned him brickbats.

and despite its efforts, the Bank of England has recently been criticised because its gender pay gap has widened. He says: ‘When I started five and a half years ago 17pc of senior management were women and it’s 32pc now. Our objective is to get to 35pc by the end of 2020.’

Businesses, he says, need a transition period whatever type of Brexit we have.

‘We have said from the start that it is just sensible, virtually essential to have a reasonable transition period.

‘It means businesses know where they are headed, they know what the access is going to be in Europe and I would say a couple of years to adjust.’

Based on the findings of the Bank’s network of agents up and down the country, he says firms are not prepared.

‘realistically there are limits to what business can do. Businesses will be sitting there reading this thinking, “Well are we heading to a WTO Brexit or something like the Prime Minister’s deal or some other yet to be defined form of Brexit?”

‘Those are very different worlds particularly for the manufacturing sector. So to those businesses in the north east, the north west, in Wales the answers to those questions really matter.’

Will a No Deal, no transition Brexit have a worse effect on these regions? ‘Yes. It will have a regional impact.’

CARNEY is clear that the Bank’s forecast for growth is guaranteed to be downgraded if there is a disruptive Brexit.

‘In that forecast we see the economy picking up from growing at about 1pc a year which is what it is doing now to about 2pc by 2021-22, with wages picking up further.’

If there is a No Deal, no transition Brexit the forecast is guaranteed to be lower, he says. The question is: How much lower? ‘Yes, that is the question.’

a Canadian married to a British wife, Diana – the couple have four children – he was initially intending to have left the job by now. Instead he has twice extended his term and plans to move on next year.

‘One of the reasons I agreed to extend was so I could be here on the other side [of Brexit] because it is important to be accountable.’

But is his extension long enough for that?

‘More than sufficient,’ he says with a smile.