UK Edition
Bank of England Governor Mark Carney 'has been asked to stay on to help navigate Brexit'
The Government has asked Mark Carney to stay on as Governor of the Bank of England for an extra year in order to help calm Brexit nerves in the City, according to a report.
Mr Carney, who heads the interest rate setting Monetary Policy Committee and regulatory authorities at the Bank, was due to leave in June 2019, just three months after the UK formally leaves the EU in March next year.
The report, in the Diary section of the London Evening Standard, a newspaper edited by former Chancellor, George Osborne, who appointed Mr Carney while in office, also claimed that there was a dearth of suitable candidates to replace the Canadian Governor.
Andrew Bailey, head of City watchdog the Financial Conduct Authority, has been tipped as a potential successor, as well as Minouche Shafik, a former policymaker at the Bank and director of the London School of Economics.
Ben Broadbent, a Deputy Governor at the Bank, is also viewed as a potential Governor, despite having to apologise for using the word “menopausal” to describe productivity problems in the UK economy.
However, political uncertainty and a poor field of candidates had meant Mr Carney was “quietly approached” about staying on by the Government, the report claimed.
The potential change of plans from the Treasury surprised many in the City who understood that the advertisement for a replacement was being prepared for publication in the autumn.
The City would likely welcome the continuity offered by the Governor remaining in place until 2020.
However, Mr Carney has proved a controversial figure among some Brexit campaigners. Prominent Brexiteer MP, Jacob Rees Mogg, has labelled the Governor the "high priest of Project Fear" and claimed that the Bank's forecasts on how Brexit might shape the UK economy were "politically motivated".
A Treasury spokesman said: “We will begin recruitment for the next Governor of the Bank of England in due course."
The Bank of England declined to comment on the report.
Several high profile economists in the City said that they hoped Mr Carney would stay on, with certain caveats.
Ruth Lea of Arbuthnot Banking Group said: “There is a good case for Mark Carney to stay on to navigate monetary policy and the supervision of the financial sector after Brexit. Continuity would be helpful. But it would also be helpful if he could adopt a more positive tone.”
Keeping Governor Carney in his post for another year could reassure the EU that the UK was not seeking to water down financial regulations following Brexit, according to Karen Ward of JP Morgan.
Ms Ward said: "As chair of the Global Financial Stability Board, [Carney] carries a lot of international regard which may reassure European negotiators that the UK will remain focused on prioritising financial stability, rather than seeking competitive advantage.”
Given the potential disruption and challenges that could come with a disorderly Brexit, it would be "sensible" for Mr Carney to carry on for an extended term at the Bank, said Andrew Goodwin of Oxford economics.
Mr Goodwin added: "By delaying Mr Carney’s departure until mid-2020 it would both allow the Bank to focus on the challenge of Brexit without distractions and then offer a quieter backdrop for a smooth transfer of power later on."