A good man to have in a crisis

Canadian Mark Carney’s surprise appointment to the top job at the Bank of England has been welcomed as “an outstanding choice” by its outgoing governor.

Sir Mervyn King, who will hand over the reins to Mr Carney in June, said he had admired his “widely respected” successor’s work in his current role as the governor of the Bank of Canada.

Mr Carney took up the post at the height of the financial crisis in 2008 and has been credited with helping Canada to avoid the worst of the economic downturn.

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Its economy outperformed those of its peers during the crisis and Canada was the first G7 nation to have its GDP and employment recover to pre-crisis levels.

Announcing Mr Carney as the new governor yesterday, Chancellor George Osborne said: “He has got what it takes to help bring families and businesses through these incredibly challenging economic times.”

The job is considered one of the most powerful in Britain, with the Bank of England taking on extra responsibilities for banking supervision as financial regulation is tightened up.

Mr Carney, a former Goldman Sachs investment banker, will be responsible for setting interest rates, regulating banks and heading a new committee designed to spot and ward off future crises.

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The 47-year-old is the first non-British governor in the Bank’s 318-year history and the first to be appointed after an open recruitment process.

He said: “This is a critical time for the British, European and global economies, a decisive period for reform of the global financial system, including its leading financial centre, the City of London, and a crucial point in the Bank of England’s history as it accepts vital new responsibilities.”

Mr Carney intends to take on British citizenship to serve as governor for five years, the Treasury said. He is expected to receive a relocation package to move to the UK with his British wife Diana and their four children.

Mr Osborne said his pay and benefits would be determined by the non-executive members of the Court of the Bank of England, and would be “broadly equivalent” to Sir Mervyn’s package.

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Sir Mervyn said: “I am delighted to welcome Mark Carney as my successor. He represents a new generation of leadership for the Bank of England, and is an outstanding choice to succeed me.

“Since Mark became governor of the Bank of Canada, I have worked closely with him and admired his contributions to the world of central banking, in which he is widely respected.”

Mr Carney will remain chairman of the global Financial Stability Board until 2018. He will not comment in public on the UK economy before taking up his new post, but will appear before the Treasury Select Committee for a pre-appointment hearing.

Speaking of his “delight” that Mr Carney had accepted the role, the Prime Minister said: “His distinguished record on economic policy, the high regard of his international peers and the leadership he has shown on the global economic crisis make him the exceptional person for this job.”

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Shadow Chancellor Ed Balls also welcomed his appointment as “good choice, good judgement”.

The Bank’s deputy governor, Paul Tucker, had been the bookies’ favourite but economists said his chances were damaged when he was dragged into the Barclays rate-rigging scandal. He denied sanctioning the bank’s efforts to manipulate its borrowing costs downwards and survived a grilling on the issue by MPs.

Philip Shaw, economist at Investec, said the Chancellor “sprang a huge surprise” with the announcement.

He added: “Mark Carney is a surprise choice but he is a highly respected central banker.”

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