The Bank of England (BoE) governor Mark Carney is set to leave the central bank just two months after Britain leaves the European Union on 29 March 2019. His impending departure is giving investors deep concerns about the country’s financial stability and economic prospects.
Carney is widely considered to be a steady hand that has guided Britain’s financial system through a tumultuous post-referendum period, making his expected departure at the end of June next year all the more worrying.
“It would certainly be very welcome if he were to stay on for an extra year to get through this initial period of Brexit uncertainty. To have continuity would be a welcome thing,” Lucy O’Carroll, chief economist at asset management firm Aberdeen Standard Investments told Yahoo Finance UK.
“Overall, him staying on would be regarded as a positive for investors,” she said, noting that it could support the weakened UK pound and London stocks.
With just seven months to go until Brexit, both sides have yet to agree on a deal that finalises the terms of trade, immigration, and a range of other issues.
Philip Shaw, chief economist at asset management firm Investec, said that investors want Carney to stick around because of his reputation as a smart, steady operator.
“Carney is seen as highly competent central banker who has helmed a central bank whose responsibilities have expanded hugely over the past 10 years,” he said. “He provided leadership in the aftermath of the referendum two years ago. Arguably, [he] demonstrated a much more activist approach than the central bank had done in the post-financial crisis environment.”
Carney, a Harvard and Oxford-educated Canadian who previously led Canada’s central bank, has issued gloomy forecasts about the economic ramifications of Brexit. He warned last month that the possibility that the UK could crash out of the EU without a formalised deal “is uncomfortably high” and “highly undesirable.” This would lead to higher prices and disruptions to British trade, he said.
Carney is facing Treasury select committee on Tuesday where MPs are expected to ask him about whether he would consider shifting his planned departure date.
The Treasury declined to comment on reports that it was talking with Carney about the possibility of extending his term.
The Treasury may be keen to keep Carney in place as they grapple with a huge amount of change, including Brexit and planning for the new Autumn Budget, said Ruth Gregory, a senior UK economist at the research firm Capital Economics.
There are also concerns that other suitable replacements may not be easy to find.
“There are other qualified people out there but they might not want to take up the reins when there’s so much uncertainty with the UK leaving the EU. They might want to join once some of that is cleared up,” said O’Carroll.