A brass band was playing outside the treasury on Monday afternoon as Mark Carney was named new governor of the Bank of England.
Their presence was unrelated to the appointment of the Canadian banker but, so desperate was George Osborne to land the services of the man he lauded as “the best central banker of his generation”, the chancellor might well have been tempted to lay on a celebratory serenade.
The choice of Carney as Sir Mervyn King’s replacement at the head of Britain’s central bank was unexpected – earlier in the year the Bank of Canada governor had appeared to rule himself out of the running for the role, which falls vacant when King retires next June. Despite the surprise, Carney’s appointment has been greeted with widespread acclaim in the City of London, save for a few gripes about his past as a Goldman Sachs banker.
Carney (47) will be the first non-British governor to head the bank in its 318-year history, although he does intend to apply for British citizenship. He has strong links with the UK, having studied economics at Oxford and was based in London for a time during his 13-year career at Goldman Sachs, and his wife is British.
Osborne fought hard to secure Carney’s services, upping the salary from the £305,000 earned by King to £480,000, with pension contributions, taking the total package to £624,000.
Carney was not keen on the eight-year term of the governorship, and Osborne was happy to accommodate him, reducing it to five years.
Appointing a foreigner – and a former Goldmanite – to such a key role was a real risk for the British chancellor, and
Osborne must be cock-a-hoop at how well his choice has been received, both in the City of London and beyond. It wasn’t just Carney’s impeccable CV that made him such a stand-out candidate. The fact he’s an outsider will also have been a big draw and underlines the government’s determination to do things differently in future.
Before Carney changed his mind about crossing the Atlantic, deputy governor Paul Tucker had been widely expected to land the top job. Tucker is well respected, although not in Carney’s league, but was tainted by the Libor scandal and there is some doubt about whether he had King’s full backing. It remains to be seen whether Tucker will stay on once his new boss starts.
King has certainly been gushing in his praise for his successor. But, as he made yet another appearance before MPs at Westminster yesterday, the outgoing governor was given rather a rough ride.
The tetchy exchanges between banker and politicians highlight the challenges ahead for Carney as he plots a new and more effective approach for the bank.
Challenged over the culture at Threadneedle Street, King was also forced to deny suggestions that the independence of the bank was under threat. Labour MP George Mudie told a grim-faced King that to outsiders he looked about as independent “as a Chelsea manager”. The governor defended himself against accusations that his autocratic manner meant colleagues were too scared to stand up to him, or to put forward alternative views, claiming there was no shortage of people “who will put their hand up and say ‘I don’t agree’.”
Carney will bring his own more open culture to the bank, which will be a far more powerful institution when he takes control than the one King inherited 10 years ago.
In Canada, meanwhile, where a political career was thought to be next on Carney’s agenda, they’re taking comfort from the fact he has decided to rent out his house in Ottowa rather than sell it, an indication he’ll be back in 2018. Let’s hope it’s a triumphant return.
Fiona Walsh writes for the Guardian in London
