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

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea