Brexiters scent blood as Mark Carney mulls future at Bank of England

Central bank governor may be forced to leave by 2018 before seeing out his full term

Mark Carney, governor of the Bank of England: Leave campaigners have called for his head on a plate, accusing him of “doom-laden” forecasts for the UK’s post-Brexit economy and for politicising his office. Photograph: Ben Stansall/AFP/Getty Images

Mark Carney, governor of the Bank of England: Leave campaigners have called for his head on a plate, accusing him of “doom-laden” forecasts for the UK’s post-Brexit economy and for politicising his office. Photograph: Ben Stansall/AFP/Getty Images

 

Ardent supporters of Britain’s vote to leave the EU believe they are on the verge of another victory by forcing Mark Carney to resign as governor of the Bank of England before the end of his term in 2018.

Mr Carney has said he will announce before the end of the year his “personal” decision of whether to serve a full eight-year term until 2021 or leave after five.

The BoE declined on Sunday to dismiss speculation that the governor might announce his decision this week alongside the quarterly inflation report.

The central bank already faces the difficult task on Thursday of admitting that the UK economy has been stronger than it expected since the Brexit vote. If Mr Carney announces an intention to leave on the same day, it will link forecast errors to his position as governor.

The BoE is likely to add that the further fall in sterling during the past month will push inflation even further above its 2 per cent target in 2017, hitting household incomes hard.

With the governor seen by financial markets as a steady hand on economic policy in contrast with much more volatile government communication of its economic plans, sterling would again be vulnerable were he to announce his departure.

Too supportive

Brexiters

Daniel Hannan, a Conservative MEP, said: “I am sorry to say this – he seems a nice enough fellow – but Mark Carney should indeed resign. He politicised his office inexcusably.”

Lord Lawson, the former chancellor, and Jacob Rees-Mogg and Bernard Jenkin, prominent Conservative MPs, have also called for the governor’s head in recent weeks, saying that he was too doom-laden on the post-Brexit economy and had been too political in office.

Mr Carney has received strong support from the chancellor, who has urged him to stay until 2021, and from allies of prime minister Theresa May in 10 Downing Street. They have believed until recently that the governor would stay until 2021.

The governor has played his cards close to his chest, stressing repeatedly that he would fulfil the commitment he made on appointment in 2013 to serve until 2018 and adding that the decision of whether to serve a full term until 2021 was personal.

Under pressure

“To be clear, it’s an entirely personal decision and no one should read anything into that decision in terms of government policy. It is a privilege for me to have this role,” he said.

“Like everyone, I have personal circumstances that I have to manage. This role demands total attention and I intend to give it as long as I can.”

Financial markets interpreted the governor’s words as an indication he would stay on, while Brexiters thought he was hinting he would leave.

The question of Mr Carney’s tenure became an issue only a year ago when he opened the door to staying until 2021. He had initially said he would not serve out the full eight-year term when he accepted the position, but changed his mind after he had settled into the job and his family were happy in London.

The stream of criticism from Brexiters before and after the referendum has irritated the governor and he has been surprised by mis-steps in government, such as Mrs May’s speech to the Conservative conference in which she suggested monetary policy had to change because it hurt savers. – Copyright The Financial Times Limited 2016