The City has a new king

Julian Harris
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CHANCELLOR George Osborne stunned the City yesterday by appointing Canada’s Mark Carney as the new governor of the Bank of England – the most powerful unelected role in the UK.

Former Goldman Sachs executive Carney is currently head of Canada’s central bank, a position he will give up on 1 June 2013 in order to take up Threadneedle Street’s top job from 1 July.

The decision to replace outgoing governor Sir Mervyn King with Carney was widely welcomed in the City and drew support from commentators of varying political and economic persuasions.

Osborne revealed the hire in the House of Commons, calling Carney “quite simply the best, most experienced and most qualified person in the world to be the next governor.”

On the opposing bench, shadow chancellor Ed Balls welcomed the decision. “I’ve known Mark Carney for a number of years and have worked with him closely. In my view this is a good choice, a good judgement and his experience will be invaluable,” he said.

Carney’s seven years at the helm of the Canadian economy saw the nation avoid bank bailouts or sovereign debt crises at a time when many Western powers were flailing.

The 47-year-old will take over the Bank just as its powers are set for an historic expansion. Carney will have responsibility not only for the Bank’s Monetary Policy Committee (MPC) but also the new Financial Policy Committee (FPC) – set up in the wake of the crisis to attempt to steer the financial sector away from turbulent waters.

The extra remit will have played in Carney’s favour given his key roles at the top of global efforts to control and stabilise finance. Carney currently serves as chairman of the Financial Stability Board (FSB) and as a member of the board of directors of the Bank for International Settlements (BIS).

The appointment of the first non-British governor since the Bank’s inception in 1694 came as a shock, with most analysts expecting deputy governor Paul Tucker – the favourite with the bookmakers – to step up to the top job.

Yet Carney, who appeared to rule himself out of the job as recently as August, was instead convinced to make the move across the pond. He will be paid a salary of £480,000 per annum, with the option of an extra 30 per cent in lieu of pension.

The wage dwarfs the £305,000 a year paid to outgoing governor Sir Mervyn.

However, Carney will not be eligible for the Bank’s generous final salary pension scheme, which has significantly bulked up the earnings of other senior Bank executives but is now being wound down.

Carney will receive a relocation package, which is yet to be finalised.

The Bank also said that Charlie Bean, a deputy governor, will stay on until 30 June 2014 to help ease the transition to a new governor.