Treasury on back foot as deputy Governor quits

One of the City's most high-profile economists, Rachel Lomax, is quitting her role as deputy Governor of the Bank of England at the end of June.

The Government has yet to find a successor for Ms Lomax, 62, who is leaving at the end of her five-year term, despite Gordon Brown's attempts to keep her on. A Treasury spokesman said the search for candidates had begun but a shortlist had not been put together yet.

An appointment needs to be made quickly because Ms Lomax has responsibility for monetary policy and sits on the influential Monetary Policy Committee. But the spokesman said that the Treasury must first appoint a new chairman for the Financial Services Authority, the City regulator, by the end of the month. The former CBI chief Lord Turner is only one of the candidates being considered by the Chancellor, Alistair Darling.

The deputy Governor role is a crown appointment, made on the advice of the Prime Minister. It will be a sensitive one to fill following the deterioration of relations between the Treasury, the Bank of England and the FSA caused by the Northern Rock debacle.

One internal candidate for the position would be Paul Tucker, the Bank's director of markets. The Governor of the Bank, Mervyn King, and his predecessor, Sir Eddie George, themselves came up through the ranks. External names include Paul Myners, chairman of Guardian Media Group, and Sir James Sassoon, the Treasury's ambassador to the City, a former UBS Warburg investment banker.

While the position is in the PM's hands, the Governor is consulted on the candidates. Sources say Mr King is keen that the deputy should be someone with strong markets experience rather than a civil servant. The Bank also needs a monetary expert to complement Sir John Gieve, the second deputy Governor, who came from the Home Office.

Ms Lomax is leaving the Bank because she wants to explore new ventures in business and has had enough of "watching monthly base rates". Over the past few years she has been a voice arguing for stability on the MPC, which meets monthly to review interest rates. The committee members tend to divide between the doves and hawks, but Lomax does not fall easily into either camp, and could be described as a dovish hawk. So far this year, she has voted twice for rates to be held and twice for a cut. She was even more cautious last year, voting on 10 occasions for rates to be maintained, once for an increase and once for a cut.

The Cambridge-trained economist was tipped as one of the favourites to succeed Mr King until he was reappointed by the Government for a second term.

Considered to be a brilliant administrator, Ms Lomax spent her early career at the Treasury, where she was private secretary to Nigel Lawson, then Chancellor, in the mid-1980s.

In a recent speech, Ms Lomax described the credit crunch as the "largest-ever peacetime liquidity crisis" and conceded there were many uncertainties facing the markets. She will have helped draw up the Bank's special liquidity scheme, launched a few weeks ago, which injected £50bn into the market by allowing banks to swap their mortgage securities for gilts.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Retirement Coordinator - Financial Services

Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...

Recruitment Genius: Annuities / Pensions Administrator

Negotiable: Recruitment Genius: You will be the first point of contact for all...

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Ashdown Group: Learning and Development Programme Manager

£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss