Section:GDN 1N PaGe:33 Edition Date:190812 Edition:01 Zone: Sent at 11/8/2019 18:23 cYanmaGentaYellowb
Monday 12 Aug ust 2019 The Guardian •
Financial^33
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Gerard Lyons was
one of the minority of
economists who backed
leave. He shares Boris
Johnson’s upbeat
view of the worldEconomic view
Larry ElliottT
he moment is fast
arriving when Sajid
Javid will choose
Mark Carney ’s
replacement as the
governor of the Bank
of England , and Westminster is
alive with speculation. One of
Javid’s fi rst requests on being
made chancellor was to be brought
up to speed on the runners and
riders for the Threadneedle Street
race, although the offi cial Treasury
line is that an announcement will
be made in the autumn.
Javid’s interest underlines
the importance given to getting
the right man or woman for the
job. He has to decide whether to
appoint one of the candidates on
a short list drawn up for him by a
panel headed by the Treasury’s
permanent secretary, Sir Tom
Scholar , or choose some one else.
There was a time when picking
a governor was an uncontentious
aff air. In the years immediately
after Gordon Brown granted it
operational independence in
1997, the Bank operated largely
as a monetary policy institute
and concentrated on hitting the
government’s 2% infl ation target.
Mervyn King was the obvious
choice to step up from deputy
governor to succeed Eddie Georgein 2003. That was before the banking
crisis of 2007-08, which resulted in
the Bank being given responsibility
for fi nancial as well as monetary
stability. It was before a decade
of squeezed living standards and
austerity. And it was before the UK
voted to leave the EU.
The Bank’s governors cannot
avoid being dragged into political
controversy. Carney, a street fi ghter
by nature, has rubbed plenty ofTory MPs up the wrong way with his
downbeat Brexit forecasts.
One school of thought is that
Javid will play it straight, choosing
someone who knows their way
around the fi nancial markets, has a
network of international contacts,
and can be trusted to steer the
economy through what might be a
tricky period. With the pound under
downward pressure in the currency
markets, there is a case for this sort
of appointment, and the chancellor
has someone who fi ts the job spec in
the form of Andrew Bailey , the chief
executive of the City watchdog, the
Financial Conduct Authority.
A variation on this theme would
see the Treasury appoint one of its
own : either Sir John Cunliff e , who
worked at the Treasury and No 10
before becoming one of the Bank’s
governors, or Sir John Kingman ,
c hairman of Legal & General but
once a senior Whitehall mandarin.
Johnson has appointed the
most ethnically diverse cabinet inBritain’s history, which has seen
bets placed on Minouche Shafi k and
Shriti Vadera. Of the two, Shafi k,
the director of the London School of
Economics, looks to have the better
chance. Born in Egypt, she worked
at the World Bank, in Whitehall’s
international development
department and at the International
Monetary Fund before joining the
Bank in 2014. That she left after
reportedly falling out with Carney
is probably a plus point as far as the
current government is concerned.
Vadera was born in Uganda and
arrived in the UK as a child after her
family was expelled by Idi Amin.
The diffi culty for the chairwoman of
Santander’s UK arm is that she was
once a special adviser for Gordon
Brown. The fact that Johnson sacked
two Brexite r ministers – Liam Fox
and Penny Mordaunt – because
they backed Jeremy Hunt in the
leadership race would seem to make
a Vadera appointment most unlikely.
There is, though, another option.It involves Javid ignoring the names
on the shortlist and plumping for
Gerard Lyons , the former chief
economist at Standard Chartered.
He would be a controversial pick.
Questions would be asked about
whether he ha d the management
skills to run an institution as big and
as complex as the Bank. Eyebrows
would be raised that a government
that might last only months was
handing him an eight-year fi xed-
term job. By no stretch of the
imagination is Lyons – not thought
to be on the shortlist – the “safe pair
of hands” choice. But Carney was
not on the shortlist either and this
is a government that relishes doing
the unexpected. From Johnson’s
perspective, putting Lyons in to run
the Bank makes sense.
First , he has a good backstory.
Brought up in Kilburn in north-
west London in an immigrant
Irish Catholic family, Lyons would
comfortably be the most working-
class governor Threadneedle Street
has ever had. Second , he worked
for Johnson when he was mayor of
London and was one of the minority
of economists who backed leave
in the referendum campaign. He
is considered “one of us” by the
prime minister. Third , Lyons is an
expansionist who shares Johnson’s
upbeat view of the world. After an
inevitable period of disruption, he
thinks Britain has a bright post-
Brexit future. He believes public
spending should be actively used
to boost growth and was a critic of
George Osborne’s austerity.
Fourth , Lyons is an expert on
China and other emerging markets,
and that will be helpful to the
government as it tries to deliver on
its promise of a global Britain. Last
but certainly not least, appointing
Lyons would send out the clearest
possible message to the rest of the
EU that the government means what
it says about leaving with or without
a deal on 31 October.
Treasury offi cials no doubt see
Lyons as too risky. But they won’t be
making the decision: Javid will be,
with input from the prime minister
and Dominic Cummings. And they
might have a diff erent perspective.Will Javid opt
for ‘one of us’
in choosing
a successor
to Carney?
▼ Gerard Lyons would comfortably
be the most working-class governor
the Bank of England has ever had
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