London / AFP
Bank of England (BOE) governor Mark Carney put an end to speculation over his future by announcing he would extend his contract for one year to 2019 to help secure an “orderly transition” to Brexit.
The Canadian will not take up his option to leave in 2018, but at the same time has declined to serve the full eight-year term that would have seen him stay on at the British central bank until 2021.
“I would be honoured to extend my time of service as governor for an additional year to the end of June 2019,” he wrote in a letter to finance minister Philip Hammond.
“By taking my term in office beyond the expected period of the Article 50 process, this should help contribute to securing an orderly transition to the UK’s new relationship with Europe.”
Prime Minister Theresa May is expected to trigger Article 50 of the EU’s Lisbon Treaty by the end of March, starting a two-year exit process that would see Britain leave the European Union by early 2019.
Carney has been strongly criticised by members of May’s Conservative party over his warnings about the impact of Brexit before the June referendum, while there was speculation about tensions with the government over policy.
In his reply to the governor’s letter, Hammond said he was “very pleased” with Carney’s decision to stay until 2019.
“This will enable you to continue your highly effective leadership of the bank through a critical period for the British economy as we negotiate our exit from the European Union,” Hammond wrote. “I am grateful for your contribution to both monetary and financial stability to date, and I look forward to your continuing contribution in the future.”
‘Much needed clarification’
Andrew Tyrie, chairman of the House of Commons Treasury committee, welcomed the “much needed clarification”, saying: “The less uncertainty the better.”
However, he said it went against the agreed timetable of eight years, adding: “The decision requires a good deal of examination and explanation.”
Carney began his tenure in 2013, stressing his intention to serve only five years of an eight-year term for personal reasons, meaning he would step down in 2018.
But in late 2015, he refused to rule out staying for the full eight years in the run-up to the Brexit referendum.
Amid intense speculation in the media over the weekend, May offered her full support on Monday morning. Her spokeswoman said Carney was “absolutely” the right person for the job.
After the announcement, a spokesman said: “The prime minister welcomes the governor’s decision to stay on beyond his initial five-year term. This is good news for the UK.”
The Sunday Times, citing senior figures who had worked closely with the governor, reported that Carney was “disillusioned” with the government and criticism from sections of May’s party.
The Telegraph welcomed Carney’s decision to stay until 2019 as bringing much-needed stability.
“The announcement… means such stability will endure through one of the most important periods in this country’s economic history,” the newspaper wrote.
Under Carney’s leadership, the bank had warned repeatedly over the potential impact of Britain’s possible departure from the European Union.
The central bank had argued in July that Britain could fall into recession as businesses delay investment decisions because of the shock June 23 vote to exit the EU.
May also stoked speculation in October at the Conservative party’s annual conference, when she argued the bank’s ultra-loose monetary policy under Carney had hurt the poor and helped the rich.
Last week Carney said any decision on the length of his term would be “entirely personal”, saying “no one should read anything into that decision about government policy”.
He has previously stated his desire to return to Canada for the education of his four daughters.