Carney sees off Brexiters but still has questions to answer

London Briefing: Critics claim win as Bank of England governor extends term by one year

So: who won? Mark Carney, the "rock-star banker", or the complaining Brexiters whose calls for the head of the governor of the Bank of England have become so venomous in recent weeks?

Both sides claimed victory as Carney agreed to extend his five-year term at Threadneedle Street by one year rather than the maximum three, which means he will now step down in the summer of 2019.

But the grin on the face of the Canadian-born banker as he left 10 Downing Street on Monday afternoon left little doubt, in his view at least, that he had the upper hand.

Just hours before that meeting with the prime minister – described as a “long-standing” engagement – Theresa May’s aides had been working hard to smooth Carney’s ruffled feathers as speculation about the governor’s plans reached fever pitch.


The prime minister was fully behind her bank chief, a Downing Street spokeswoman stressed. He was “absolutely” the best man for the job and May “would certainly be supportive of him going beyond his five years”.

In the end, Carney has opted to remain at the helm of Britain's central bank to steer it through the crucial two-year Brexit negotiating period, with just a few months to spare – always assuming that article 50 actually is triggered in March next year as planned.

Project Fear

The anti-Carney camp, enraged by the bank’s grim warnings on the economy in the run-up to the June referendum, claimed victory in that they will see the back of the Canadian in 2019 rather than 2021. But some are still demanding that he depart immediately as punishment for what they see as his role in “Project Fear”.

Complaints about Carney had already surfaced in the ill-tempered run-up to the European referendum, with accusations that the Bank was overstepping its remit in outlining the potential dire economic consequences of a vote to leave the European Union.

Carney’s statesman-like performance in calming the markets in the immediate aftermath of the poll result quieted critics for a while at least but it proved only a temporary respite.

Leading Brexiters have been lining up to slate the governor in recent weeks – former chancellor Sir Nigel Lawson, for example, called for Carney's resignation, accusing him of scaremongering and of behaving "disgracefully". Having known all six of Carney's predecessors personally, none of them would have thought it proper to behave in such a manner, Lawson thundered.

But the most wounding blow of all came from the prime minister herself. In her speech to the Tory party conference in early October, May was highly critical of the bank’s monetary policy, blasting what she called its “bad side effects”, as those with assets become richer and those without, poorer. “A change has got to come,” she told the party faithful. “And we are going to deliver it.”

Her remarks, seen as a thinly-veiled attack on Carney – caused astonishment in the City and marked a new low in relations between the government and Threadneedle Street. The anti-Carney camp gleefully seized upon it as a declaration of war and stepped up their campaign against the governor.

Vitriolic attack

Although May later back-peddled furiously on her conference remarks, the damage was done. One of the most vitriolic attacks on Carney came from the failed Tory leadership candidate Michael Gove, who penned a poisonous article in the London Times, in which he accused Carney of a lack of humility and being unable to accept criticism.

“Any criticism of his actions is regarded as a thought crime – and those who dare to question his rule are flayed in the press with dire warnings left hanging in the air to emphasise the governor will brook no challenge to his authority”, Gove wrote. Comparing Carney to Ming, he advised the governor to “ponder the fate of the Chinese emperors”.

There should be no more talk of Ming now that Carney has the unequivocal backing of the prime minister and the speculation surrounding his departure date has been settled, although it’s probably too much to hope that the more rabid Brexiters will cease their hostilities.

While Carney has played a good political game, he does have questions to answer. The bank’s forecasts have proved way too gloomy thus far and, although it is not alone in having overstated the impact of the referendum, its reputation for reliable forecasting has taken another knock.

Carney might also be advised to do some repair work on his own thin-skinned reputation. He’ll get a chance to start Wednesday, when he’ll be grilled by financial journalists at a televised press conference on the bank’s quarterly inflation report.

Fiona Walsh is business editor of