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--Doubts Over How Long Hammond Has Left Clouds BOE Governor Appointment
--BOE Veteran Andrew Bailey Front-runner For Governorship
By David Robinson
LONDON (MNI) - The UK's volatile political environment is making the search
for the next governor of the Bank of England more difficult, tilting the scales
towards a seasoned, home-grown appointee with diplomatic skills such as BOE
veteran Andrew Bailey, MNI understands.
Bailey, who joined the Bank in 1985 and currently heads the Financial
Conduct Authority, is seen as the leading candidate, in part because he has
demonstrated the ability to function well during shifts in regimes.
Chancellor of the Exchequer Philip Hammond has said he wants to find a
replacement for current Governor Mark Carney by October, and candidates will be
assessed not only according to whether they have the capacity to flourish for a
full term, but also according to whether they will get on with the head of the
Treasury. But there is no certainty that the UK's finance minister, or even the
prime minister, will still be in the job by then.
A future governor might have to respond to proposals such as those by
Shadow Labour Chancellor John McDonnell and his colleagues in the opposition
Labour Party, including setting the BOE a productivity target. This would be an
anathema to conventional central bank thinking, but any response would have to
avoid the danger of the BOE's becoming embroiled in politics.
BOE Chief Economist Andy Haldane, himself a candidate for the top job, was
questioned at a hearing of the cross-party Treasury Select Committee about how a
central bank could boost productivity to meet a target. Haldane skirted around
the issue before Carney stepped in and said, bluntly, "we wouldn't have the
Haldane is a serious contender to head the BOE. A highly skilled
communicator, hr is spearheading the Bank's development and adoption of
real-time data. He also chairs the newly-formed Industrial Strategy Council -
demonstrating his appeal to the government, He can expect questions, however,
over how we would handle the nuts and bolts of a future financial crisis,
Another matter to be taken into account in the search would be whether the
revelation of the identity of the new Bank of England head would in itself bring
prestige to the institution or to the government.
This star factor was key to the appointment of Carney, seen as a central
banking luminary when he was lured from the Bank of Canada. But officials fear
that the heightened political atmosphere, which has led to the Bank's being
targeted by Brexit campaigners for supposedly overplaying the negative effects
of the UK's departure from the EU in its projections, has reduced the appeal of
the governorship to similar big-name foreign candidates.
Among other frequently mentioned candidates, Deputy Governor Jon Cunliffe
has the diplomatic skills, but his lack of an economics background could count
Santander chairwoman Shriti Vadera made a name for herself as a key aide to
former Labour Prime Minister Gordon Brown during the global financial crisis and
has a reputation for getting things done.
But she lacks monetary policy experience and her previous links to Labour
would make her a surprising choice under the current Conservative government.
Deputy Governor Ben Broadbent is acknowledged to be a formidable economist
and first rate thinker, but his skill set may be deemed too narrow.
Sharon White, an economist by background, former Treasury high flier and
now chief executive of communications regulator Ofcom, is another name in the
frame. One suggestion was that she could be perfectly placed to be the governor
after next, with time on her side and her career options wide open.
On past precedent, a committee including the top Treasury official, now
Permanent Secretary Tom Scholar, and Chair of the BOE Court Bradley Fried, will
sift candidates and draw up a short-list likely to be acceptable to the
Chancellor. This time around, an external recruitment agency will also be
Hammond acknowledged to reporters last month in Washington that "There may
be some candidates who might be deterred from an application because of the
political debate around Brexit."
--MNI London Bureau; tel: +44 203-586-2223; email: email@example.com