After Mark Carney; who could be next? Stuart Jones

On 31st January 2020 there will be a change in the Governor of the Bank of England (BoE).

Mark Carney, the current Governor, was appointed in 2013 when he agreed to an initial five-year term. This was first extended until June 2019 to have continuity through the original Brexit date and then extended again until the end of January 2020, both to ensure there was enough time to find a suitable replacement and so that he could support a smooth Brexit.

The new Governor will be appointed by the Chancellor of the Exchequer, currently Sajid Javid, in Autumn 2019. If there is a general election Javid may not be the person who makes the appointment.

Who will replace Mark Carney? The candidates are:

Andrew Bailey, Chief Executive of the Financial Conduct Authority (FCA)

The current favourite, Andrew Bailey has more than 30 years’ experience at the bank, rising to deputy governor before moving over to the FCA. He is very familiar with the role and diplomacy necessary. He is expected to maintain the current BoE position on interest rates of “gradual, limited rises,” however he has not sat on the Monetary Policy Committee (MPC) before and is not a macroeconomist.

Alongside this, he has a pragmatic approach to financial regulation, however, has stated he is “not advocating lighter regulation… [and] not advocating heavier regulation”.

Dr Ben Broadbent, Bank of England Deputy Governor for Monetary Policy

Dr Broadbent runs the macroeconomic side of the Bank of England and is a highly respected economist. Prior to being Deputy Governor, he was an external member of the MPC. In addition to his membership of the MPC he is also a member of the Financial Policy Committee (FPC) and Prudential Regulation Committee, he has specific responsibility within the Bank for Monetary Policy, including monetary analysis and shared responsibility for the Bank’s International macroeconomic analysis, strategy and engagement.

He was formerly an Economic Adviser at HM Treasury, and Assistant Professor of Economics at Columbia University from 1997-2000. 

Sir Jon Cunliffe Bank of England Governor for Financial Stability

Sir Jon is a member of the Bank’s MPC and FPC, the Bank’s Court of Directors and the Prudential Regulation Committee. 

He has specific responsibility within the Bank for financial stability, for the supervision and oversight of Financial Market Infrastructures, Resolution and International. He is a member of the G20 Financial Stability Board Steering Committee and the European Systemic Risk Board. 

Minoche Shafik, Director, London School of Economics

Shafik has worked at the World Bank, Whitehall’s international development department and the International Monetary Fund before joining the Bank in 2014. She stayed just over 2 years on the MPC before leaving to become the first female director of the London School of Economics.

Shriti Vadera, Chair of Santander UK

Vadera came to prominence in the Treasury during the onset of the financial crisis in 2008 as one of Gordon Brown’s chief aides. Having worked as an investment banker at UBS before moving into government she now also has directorships with the mining firm BHP and the pharmaceuticals business AstraZeneca, giving her the widest business experience of any candidate. Like Bailey, she has plenty of management experience, but has not been involved in the core activity of setting interest rates.

Gerard Lyons, former chief economist at Standard Chartered

There has been a recent surge in Gerard Lyons’ popularity for the job after Boris Johnson was elected. He wasn’t on the shortlist of candidates prepared under Phillip Hammond; but then again neither was Carney on George Osbourne’s shortlist in 2013. Lyons was one of the few economists that supported leave in the Brexit campaign and so is closely aligned with the current government’s views. He was also economic advisor to Johnson while he was mayor of London. However, Lyons would be a wild card choice and it would need to be asked if he could run a regulatory institute as large and complicated as the BoE.

Andy Haldane, chief economist at the BoE

Another of the candidates known for going against the grain. For example, in the event of a no deal Brexit, Carney and other MPC members have said that the BoE is more likely to cut rates than raise them, taking a dovish view. Haldane, on the other hand, has taken a hawkish stance stating that he would be careful about lowering rates unless there was a “sharp economic downturn.” Haldane has a strong knowledge of the UK economy, but some believe that he is too academic to lead the bank. There are also reports that the Labour shadow chancellor John McDonnell might choose Haldane to replace Carney if he is chancellor when the decision is made.

Neither Raghuram Rajan, former Reserve Bank of India Head, or Janet Yellen, former head of the US Federal Reserve, applied for the role because of the current political situation Brexit has caused. The Governor’s role has become significantly more political which deterred Rajan and Yellen, among other potential candidates, from applying.