Wednesday 23 May 2018

Mark Carney - cometh the hour, cometh the man

Mark Carney, governor of the Bank of England
Mark Carney, governor of the Bank of England
Colm Kelpie

Colm Kelpie

In a chaos-filled week replete with political intrigue, financial turmoil and ominous economic signals, one man stepped up to save the markets - Mark Carney.

The Irish-Canadian Bank of England Governor's calmly delivered speech on Thursday suggested that at least one person, or institution, had a plan for tackling the Brexit fall out.

In the wake of the vote Britain's famously stable political system buckled, and Europe struggled to even respond to the situation.

But, exactly a week after the ballot, Carney stepped in to fill the leadership vacuum. And the markets responded with relief.

Supported by Carney's clear signal that he'll support the UK economy by driving down the pound, the FTSE 100 Index has now fully recovered after its post-Brexit tumble.

In fact the London stock exchange ended up with its best week since 2011.

Mark Carney's reassurance that the Bank of England will loosen policy sent the gauge to its highest level since August.

The lack of political leadership in Britain had heaped responsibility on the Bank of England to steer the economy.

As one analyst said after his speech, the lesson from previous crises is there's value in acting early and decisively. As far as Carney is concerned, its a lesson learned.

His stance has also won the praise of Michael Gove, the newly announced contender for Number 10, which is particularly notable given the ire heaped on the governor by 'Leave' campaigners during the referendum campaign, for pointing out the economic risks posed.

It had even prompted speculation that if a pro-Brexit leader such as Gove becomes prime minister, Carney might be in for the chop.

Gove's comments yesterday suggest the Leave campaigner turned prime ministerial hopeful is already looking to mend bridges.

The Bank of England Governor wasn't for moving on anyway.

Asked after Thursday's speech, if his position would become untenable if Leave campaigners take control of Britain's government, Carney said: "The exact opposite".

"It would be irresponsible of me, or any of my other colleagues, to walk away from those obligations, because those are our obligations under statute," he said.

Unlike most central bankers, Carney actually has form in helping steer an economy away from crisis.

He took over the Old Lady of Threadneedle Street fresh from his success in helping Canada ride out the global financial crisis, as the then head of his own country's central bank.

Dapper and athletic, the married father of four girls became an Irish citizen during a stint working as an investment banker in Europe in the late 1980s, and has family roots here.

The son of a teacher and school principal, Carney grew up in Edmonton, Canada. He has an economics degree from Harvard, a doctorate from Oxford and spent 13 years working around the globe with Goldman Sachs, before joining Canada's Department of Finance. He later joined the Bank of Canada, the country's central bank, where he worked his way up to the top Governor's job.

Fit and sharp-suited, Carney retains the smoothness of an investment banker.

He made his mark during the financial crisis, when Canada's recession was one of the shallowest of the world's richest nations, including by cutting interest rates to keep credit moving through the downturn, when Europe took the opposite approach.

Uniquely for a big developed economy, no banks in Canada needed - or got - government help during the crash. Britons will now be hoping he can pull it off again. So far he has. The mix of decisive action and calm demeanour this week helped smack Britain out of it post-referendum panic. There's a long way to go though.

Irish Independent

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