Sunday 4 August 2019 11:50 am

Andrew Bailey warns government to keep hands off the Bank of England

A frontrunner in the race to become the next governor of the Bank of England has warned politicians not to meddle with its independence.

Financial Conduct Authority (FCA) chair Andrew Bailey said the Bank’s independence was a “core underpinning” of economic stability, the Sunday Times reported.

Bailey is among the favourites to take over in Threadneedle Street, despite a series of financial scandals that have rocked the City during his time heading the City watchdog.

Read more: FCA boss Andrew Bailey heckled by victims of financial scandals

The Bank and its current governor Mark Carney have been heavily criticised by pro-Brexit politicians and commentators for their gloomy predictions about Brexit.

Bailey stressed the importance of the independence of the Bank for the proper functioning of the economy.

“Central bank independence is a very important underpinning that has to be there all the time,” he said. “You have to be ready to defend it and advocate it in different contexts.”

New Prime Minister Boris Johnson and chancellor Sajid Javid will select a new governor for the Bank in the next few months.

Bailey is widely seen as a leading contender for the post.

Others tipped for the job include pro-Brexit economist Gerard Lyons, the Bank’s deputy governor Ben Broadbent, the Bank’s chief economist Andy Haldane and director of the London School of Economics Minouche Shafik.

Read more: Mark Carney warns no-deal Brexit shock would be ‘instantaneous’

Bailey has been the target of anger from victims of financial scandals that have taken place during his tenure at the FCA, including the suspension of Neil Woodford’s £3.7bn Equity Income fund in June and the collapse of mini-bonds firm London Capital & Finance in March.

Last month at a public meeting addressed by Bailey in London, angry members of the audience shouted “stop protecting the crooks” and “run away slimy”.

On Friday, Carney told the BBC that the shock of a no-deal Brexit would be “instantaneous”.

Carney said it is “not helpful” to deny the challenges that a no-deal scenario would bring. He said there would not only be disruption at Britain’s borders, but such a situation would render a “substantial number” of businesses “no longer economic”.

The automotive sector, food and chemicals and transport industries would suffer most of all, he said. 

“Restructuring an economy in terms of changing supply chains, retraining workers, shutting down plants that are no longer economic, starting up new ones that would be economic – that is very difficult.”