Labour's brave new world takes shape

City pleased with appointments of Clementi and King

The Government announced the appointment of two new deputy governors to the Bank of England yesterday, pleasing the financial markets with its choice of a prominent investment banker and the Bank's highly respected chief economist.

David Clementi, leaving his job as vice-chairman of Kleinwort Benson, and Mervyn King, architect of the Bank's quarterly Inflation Reports, were widely seen as likely to be tough on inflation and independent-minded.

Mr Clementi's appointment as deputy to Governor Eddie George was leaked last weekend and was revealed by Dresdner Bank, Kleinwort Benson's parent, when it reported its results this week. However, the Government's decision to name Professor King for the other deputy governorship, which will be created in the autumn by the new Bank of England Act, came as a surprise.

His elevation was viewed positively by many City economists. "He is the best choice they could have made," said David Mackie at JP Morgan. Professor King is seen as a leading candidate to become the next Governor of the Bank if the Government decides not to renew Mr George's contract next year.

Professor King joined the Bank as its chief economist in 1990 from the London School of Economics. His academic reputation had been cemented by his research on taxation, which helped shape the simplification of income tax and the use of the tax system to encourage saving.

He has played a crucial role in creating the inflation target framework for monetary policy and in restoring credibility after the fiasco of "Black Wednesday" when the pound dropped out of the exchange rate mechanism.

Professor King's presentation of the quarterly Inflation Report has helped carve him a high profile. He is seen as too hawkish by some commentators and has a reputation for not suffering fools gladly.

Mr Clementi's views about inflation and interest rate policy are unknown, but analysts were reassured by his prominence in the Conservatives' privatisation programme. He joined Kleinwort Benson in 1975, having qualified as an accountant at Arthur Andersen. As joint head of the bank's corporate finance division from 1989, he is credited with having rescued the privatisation of the electricity industry from disaster. He was also involved in the British Gas and Cable & Wireless sell-offs.

Professor King will have responsibility for monetary stability and the inflation target, while Mr Clementi will be responsible for financial stability and the running of the Bank of England. The appointments were part of Gordon Brown's reshaping of the Bank of England and of financial regulation. The deputy governors' salaries will be similar to the pounds 184,083 Mr Davies received last year.

Both deputy governors will join Eddie George on the monetary policy committee, which votes on the level of interest rates each month. Two other executive directors of the Bank, Ian Plenderleith and whoever replaces Mr King as chief economist, also have places on the committee, alongside four outside experts nominated by the Chancellor. On balance, the committee is expected to nudge interest rates up by another quarter point to 7 per cent next Thursday.

Comment, page 21

Teeth should be brushed twice a day to prevent tooth decay
Bryan Cranston as Walter White, in the acclaimed series 'Breaking Bad'
Those who were encouraged to walk in a happy manner remembered less negative words
footballChelsea 6 Maribor 0: Blues warm up for Premier League showdown with stroll in Champions League - but Mourinho is short of strikers
Arts and Entertainment
Princess Olga in 'You Can't Get the Staff'
tvReview: The anachronistic aristocrats, it seemed, were just happy to have some attention
Renee Zellweger as Bridget Jones
ebooksAn unforgettable anthology of contemporary reportage
Life and Style

Board creates magnetic field to achieve lift

There have been various incidents of social media users inadvertently flouting the law

Life and Style
Stack ‘em high?: quantity doesn’t always trump quality, as Friends of the Earth can testify
techThe proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Bourgogne wine maker Laboure-Roi vice president Thibault Garin (L) offers the company's 2013 Beaujolais Nouveau wine to the guest in the wine spa at the Hakone Yunessun spa resort facilities in Hakone town, Kanagawa prefecture, some 100-kilometre west of Tokyo
CSKA Moscow celebrate after equalising with a late penalty
footballCSKA Moscow 2 Manchester City 2: Premier League champions let two goal lead slip in Russia
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Senior Helpdesk Analyst / Service Desk Co-ordinator

£27000 per annum + pension, 22 days holiday: Ashdown Group: An established ind...

Senior Pensions Administrator

£23000 - £26000 Per Annum: Clearwater People Solutions Ltd: Our client is curr...

Corporate Actions Administrator / Operations Administrator

£25 - 30k: Guru Careers: A Corporate Actions Administrator / Operations Admini...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London