Mark Carney to leave Bank two years early amid warnings UK faces 'darkest days'

The annoucement means Mr Carney will remain to see potentially turbulent Brexit negotiations though to the end

Zlata Rodionova
Monday 31 October 2016 09:17
Carney took up the position in July 2013 under an agreement in which he had a five-year term with the option of another three years
Carney took up the position in July 2013 under an agreement in which he had a five-year term with the option of another three years

Mark Carney has said he will remain as Governor of the Bank of England for three more years on a day in which the pound was named as the world's worst-performing currency for the past month amid warnings the UK could experience "darkest days" in 2018..

The Bank ended speculation about his future by confirming Mr Carney will remain in his post until the end of June 2019, 12 months longer than originally planned - but it means he will not take up the option of three more years, despite a vote of confidence from Theresa May.

The Governor said this extra 12 months should cover the period over which Britain leaves the European Union, and will help “secure an orderly transition” to the UK’s new relationship with Europe.

Earlier Ms May had backed Mr Carney as the "best man" for the job with the Prime Minister’s spokeswoman saying she would welcome him staying until 2021.

What does the falling pound mean for you?

She said: "The Prime Minister has been clear in her support for the governor, the work he is doing for the country. It is clearly a decision for him, but the PM would certainly be supportive of him going on beyond his five years."

Her statement came as the pound sterling became the world’s worst-performing currency against the dollar this month, trailing behind 150 major currencies as the first signs of how the UK would look outside of the EU started to emerge in October.

According to the Financial Times, sources suggest that Mark Carney believes 2018 could be the “darkest days” for the UK.

Carney, who has played a key role in trying to manage the British economy and stave off a possible recession as the country prepares to leave the EU, told a parliamentary committee last week: "To be clear, it’s an entirely personal decision and no one should read anything into that decision in terms of government policy. It is a privilege for me to have this role."

The pound is the worst performing currency in the world against the dollar

"Like everyone, I have personal circumstances that I have to manage. This role demands total attention and I intend to give it as long as I can."

October has been the unkindest month for Carney, under fire ever since Ms May criticised the impact of quantitative easing in her Conservative party conference speech, saying “people with assets had got richer, people without them had suffered”.

Michael Gove, the former Justice Secretary and one of the leaders of the Leave campaign, launched an attack on Carney, saying he should “curb his arrogance”, while Conservative MP and Eurosceptic Jacob Rees-Mogg described Mr Carney as a “sore loser.”

Meanwhile, Daniel Hannan, a Conservative MP, added to calls for his resignation saying: “I am sorry to say this - he seems a nice enough fellow- but Mark Carney should indeed resign. He politicised his office inexcusably.”

On the other side, Greg Clark, the business secretary, told BBC1’s Andrew Marr Show on Sunday that Carney had done a "tremendous job" for the UK economy.

While Vicky Pryce, of the Centre for Economics and Business Research, on Monday said that anyone who criticises Mark Carney’s move is "criticising the Bank’s independence."

"Mark Carney was absolutely right to be prepared to do something about Brexit. The economy wouldn't be growing anything like as fast as it is if it wasn't for his very immediate intervention in the markets," she said on the BBC’s Today programme.

Financial markets and investors will also be watching developments closely and any signs of political uncertainty could send the pound, which has lost almost a fifth of its value against the dollar since the referendum in June, lower.

Philip Shaw at Investec said: "Uncertainties have risen since the Brexit vote... keeping Carney at the helm for a further three years is the sort of continuity that should be welcomed."

Carney took up the position in July 2013 under an agreement in which he had a five-year term with the option of another three years.

Earlier this month, the Governor said in a speech that the Bank would not be taking "instruction on our policies" from politicians.

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