February 19, 2020

Who Succeeds Mark Carney? Brexit Brings Uncertainty to the Bank of England

“Before the referendum, official economic projections intended to scare the country into voting Remain didn’t succeed,” Mr. King wrote in a Bloomberg opinion column last year. “It saddens me to see the Bank of England unnecessarily drawn into this project.”

Mr. Carney has defended the forecasts, maintaining that there are “lots of things to worry about in the event of a no-deal Brexit,” in which the country leaves the union without any agreement over the terms of its separation or its relationship with the European Union.

But Brexit-related criticism will make the job less attractive, said David Blanchflower, a professor of economics at Dartmouth College who has served on the bank’s monetary policy committee. “Who would take it and take all that flak that’s inevitably coming? Think of all the flak headed at Jay Powell.”

Mr. Powell, the Federal Reserve chair who was nominated by President Trump, has quickly become a target of Mr. Trump’s ire, most recently, for not cutting interest rates enough.

The next Bank of England governor may also face pressure from the government to help shore up the economy post-Brexit. “There will be a lot of pressure, political demands made,” said Adam S. Posen, the president of the Peterson Institute for International Economics and a former member of the monetary policy committee at the bank.

Whoever succeeds Mr. Carney will face an economy where investment has sunk, held back by the uncertainty surrounding Brexit, and growth that is still positive, but has weakened.

The Bank of England’s inflation target is 2 percent and Britain is at 1.7 percent. Inflation could soar if the pound, which has tumbled against the dollar amid Brexit uncertainty, hurtles lower after a no-deal departure. At the same time, the economy could take a hit from the shock of Brexit.

Article source: https://www.nytimes.com/2019/09/29/business/economy/mark-carney-brexit-bank-of-england.html?emc=rss&partner=rss

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