Carney's choice: stay for
Brexit or seek new role in 2018?
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[September 23, 2016]
By William Schomberg
LONDON (Reuters) - Mark Carney has been
taking the big decisions for Britain's economy for the past three
years, but his next one will be much more personal.
The Canadian has said he intends to say before the end of this year
whether he will stick to his original plan to step down as Bank of
England governor in less than two years' time, or extend his stay
until 2021.
Above all, he will have to decide whether he wants to stay for the
task of steering Britain's economy through what is likely to be a
period of upheaval as it leaves the European Union and begins life
outside the bloc.
Some think that is the kind of job that Carney - who was hailed by
the man who hired him, former British finance minister George
Osborne, as the "outstanding central banker of his generation" -
would relish.
When his move from the Bank of Canada to the BoE was announced in
2012, Carney said he was "going to where the challenges are
greatest" at a time when Britain was still suffering from the
hangover of the global financial crisis.
Richard Barwell, a former BoE economist, said the even bigger
challenge of Brexit would appeal to Carney's sense of ambition. "He
wants to be in the spotlight and on the world stage," Barwell, who
now works at BNP Paribas, said.
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Even if he privately has doubts about staying, Carney might find it
hard to leave London after five years, given the expected Brexit
shock to the economy. "Walking away at time of crisis might not be
seen as the done thing," Barwell said.
When Carney agreed to come to London, he secured an agreement from
Osborne that he would run the BoE between 2013 and 2018, with an
option to serve out a full eight-year term if he wanted to take it
up.
Carney, the father of four school-age children, said then that he
had personal and professional reasons for staying for five years
rather than eight.
He quickly began an overhaul of the 322 year-old BoE, making its
monetary policy and bank supervision work more closely, addressing
one of the key lessons of the financial crisis.
But in January, Carney left the door open to a longer term, saying
he would decide by the end of this year whether he would seek to
stay until 2021.
Commentators were quick to link the change in tone to the diminished
prospects of a switch into politics for Carney in his native Canada,
where Justin Trudeau had just been elected as the country's new,
young prime minister.
Under the terms of his appointment, Carney can choose to serve out
the full eight years without the approval of Britain's new finance
minister Philip Hammond who, in any case, has said spoken highly of
the BoE's smooth response to the Brexit shock and said Carney was
doing "an excellent job."
Chris Philp, a Conservative lawmaker who sits on the Treasury
Committee in parliament, which oversees the work of the BoE, said he
wanted to see Carney stay until 2021.
"He has done a good job at the Bank since his appointment, and the
relatively smooth passage – so far – post-Brexit vote is in part
attributable to him. I would like to see him stay longer," Philp
said.
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![](../images/092316pics/busine26.jpg)
Bank of England governor Mark Carney arrives at Whitecross Street
Market in London, Britain September 13, 2016. REUTERS/Stefan Wermuth
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BREXIT BLUES?
The lack of an obvious next move for Carney could be a factor that persuades him
to stay longer in London.
In fact, one suitably big job - running the International Monetary Fund - is due
to become available only in 2021, which would coincide with the end of a full
eight-year term for Carney at the BoE.
However, some observers think that June's Brexit vote has made it more likely
that he will decide to leave the BoE in June 2018, as originally planned.
Before the referendum, Carney made it clear he thought leaving the EU would be
bad for Britain's economy, angering some Brexit campaigners, and last week he
described the day after the "Leave" victory as his toughest.
Former finance minister Nigel Lawson kept up the attacks on Thursday, saying
Carney's involvement in the debate had been "disgraceful" and he should quit.
But most of his critics have toned down their attacks since the vote.
With the economy now expected to slow sharply in the next few years because of
the uncertainty caused by Britain's planned departure from the EU, the BoE is
facing the prospect of a potentially long exercise in damage control.
At the same time, the ability of the BoE to come up with a lot more stimulus for
the economy looks limited.
![](http://archives.lincolndailynews.com/2016/Sep/23/images/ads/current/graue_16_sonic_091216.png)
Interest rates stand at nearly zero and Carney has repeatedly said he does not
favor cutting them into negative territory although it does have the option of
ramping up its 435 billion-pound bond-buying program even further.
In another potential disappointment for Carney, Brexit will also diminish
Britain's influence over EU rule-making in the financial services industry, a
subject close to his heart.
"Does he really want to preside over an additional three years of decline?
Probably not," an observer of Carney said.
(Additional reporting by William James; Editing by Jeremy Gaunt)
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