Britain’s search for new Bank of England Governor is as tricky as Brexit

At a time during which the British public are at their usual calm, considered and industrious best, the ineptitude of all parties in the government is easily exposed.

Britain’s society and commercial environment whose diversified economy and highly advanced technology across all sectors are the envy of the majority of the world, and it could be proffered that useless governments presiding over a very sensible and well ordered nation are as irrelevant as they are noticeable.

Whilst Britain’s economic might and forthright corporate leadership has been a driver of its innovative spirit that has led to pretty much every invention in the world having originated from the UK from the industrial revolution period henceforth, it is perhaps something of an enigma that the position of the governor of the Bank of England, issuer of the world’s most valuable currency, has to be a political one.

Currently, Mark Carney, a Canadian national and Goldman Sachs alumnus, is a staunch ‘remainer’ – that being a term for a British resident who voted for the UK to remain a member of the European Union – and has in many cases displayed his preference for European Union member.

Following the referendum, in which the electorate voted to leave the EU – a decision which is now being undemocratically overturned by the EU and the wet British government, Mr Carney in November 2018 warned that large parts of the British economy were not ready for a no-deal Brexit.

Now, the Bank of England’s search for a new governor is underway, however Chancellor of the Exchequer Philip Hammond has today stated that the search has become more difficult because some candidates are being put off by the idea of being dragged into the Brexit turmoil.

Chancellor Hammond said the selection process to find a successor for the Canadian as governor of the Bank of England is ‘getting under way’, but that some were wary of putting their hat in the ring because they did not want to be thrown into the middle of toxic political rows.

‘Obviously I would have preferred to have the Brexit issue resolved before we started the process,’ Chancellor Hammond said.

He said some of those who would normally put their names forward might be ‘deterred from an application because of the political debate around Brexit which inevitably the governor cannot avoid being part of.’

He said: ‘There may be some candidates who wouldn’t want to be exposed to that level of political debate.’

At the same time, City commentator Alex Brummer, a gentleman whom I have known for many years and respect highly, stated that Mr Hammond argues that it is ‘blindingly obvious’ that candidates to be next governor of the Bank of England might be deterred by the politics of Brexit.

Alex Brummer continued to opine that “The Chancellor was not talking abstractly. After two unplanned extensions, as a result of the fog of Brexit, current incumbent as governor, Mark Carney, is due to leave in January 2020.”

Mr Brummer, aligned with FinanceFeeds way of thinking, considers that “With due respect to Mr Hammond, his suggestion that Brexit-politics might put off candidates for governor is a fairy tale. Being a central bank governor is one of the jobs most economic policymakers aspire to.”

“The idea that any person can be responsible for setting interest rates, fighting inflation and keeping the financial system safe without making decisions with political repercussions is naïve. Indeed, the reputations of central bankers are built in the furnace heat of financial crisis” said Mr Brummer.

Mr Hammond has ruled out the possibility that Mark Carney would stay on for longer to see the economy through a stormy Brexit process, and current favourites to assume the position include Andrew Bailey, chief executive of City regulator the Financial Conduct Authority, though his chances may have been harmed by recent scandals.

Insiders at the Bank with a chance of the top job include deputy governor Sir Jon Cunliffe and chief economist Andy Haldane. Others in the running are Raghuram Rajan, the former governor of the Indian Central Bank, and Shriti Vadera, chairman of Santander UK, who if chosen would be the first female governor.

Mark Carney is a figure who lacks the respect of the British public and of many senior financial markets executives, and has been considered in some cases to be too close to the European Central Bank’s elite, especially under its current leadership, this being a fly in the ointment of pro-Brexit conservatives.

Should another government-orientated centrist such as FCA CEO Andrew Bailey be appointed, it is likely that the same May/Cameron style public sector ineptitude may ensue, however if the bank goes down the route of hiring a skilled private sector banker such as Shriti Vadera, we may be in with a good chance of continued prosperity.