The Treasury has played down reports that Mark Carney, the governor of the Bank of England, has been approached to stay a year longer than planned to manage the potential fallout from Brexit.
Officials said they “did not recognise the reporting” by the London Evening Standard after the paper said Carney had been asked to stay on until 2020, while suggesting the Treasury had struggled to find suitable replacements.
Carney is due to step down as governor in June next year, just months after Britain formally leaves the EU on 29 March, prompting speculation about his replacement as concerns grow over the prospects for the economy. Several international candidates have been mooted as successors.
Jacob Rees-Mogg, the Conservative MP and leading Brexit supporter, who has been a staunch critic of the governor, said the Treasury should not extend his tenure. “Carney refused [an eight-year term as governor], accepting a shorter one, which was then extended. To change it again would be ridiculous,” he said.
Labour MPs on the Treasury committee, which is tasked with scrutinising the appointment of the Bank’s governor, said the Canadian staying would help Britain in the event of a no-deal Brexit.
Rushanara Ali said it would provide continuity and Wes Streeting said: “Given the government’s disastrous handling of the negotiations and increasing likelihood of a bad deal or no-deal, having an experienced governor at the helm would be incredibly reassuring.”
City investors welcomed the idea of Carney remaining in his post, saying it would remove an additional layer of uncertainty about economic policy once Britain has left the EU. They also praised his ability to calm the financial markets, which could be rocked by the UK crashing out without a deal.
Anthony Gillham, the head of investment at Quilter Investors, said: “Carney is a known quantity and would subsequently offer a degree of calm that could help to reinforce confidence at the margins.”
Should the speculation prove accurate, there is no guarantee the governor would accept the offer of remaining at the Bank longer than initially planned.
Carney had already agreed after the Brexit vote to extend his term from five to six years, still short of the eight years governors usually serve.
He has support from the chancellor, Phillip Hammond, but leading Brexiters have repeatedly criticised his leadership, arguing that under his control Threadneedle Street had produced deliberately gloomy economic forecasts before the EU referendum. They have also attacked him for his warnings over the consequences of a no-deal Brexit.
The latest speculation over his future was published in the diary pages of the Evening Standard, usually reserved for gossip from around London and Westminster. The newspaper is, however, edited by the former chancellor, George Osborne, who was responsible for hiring Carney in November 2012.
Hammond told journalists earlier this year that he had begun looking for candidates to replace Carney at global gatherings of economists such as the spring meetings of the International Monetary Fund in Washington.
Andrew Sentance, an economist and former member of the Bank’s rate-setting monetary policy committee, has argued the new governor must not be “jetted in from overseas” and must have a better grasp of the UK economy than Carney.
Several international candidates have nevertheless been touted, including Raghuram Rajan, the former head of the Indian central bank, and Agustín Carstens, the former governor of the Bank of Mexico. Andrew Bailey, the head of the Financial Conduct Authority, and the Bank’s deputy governor, Ben Broadbent, have been named as potential domestic successors.
Although it was expected the Treasury would publish a formal advert for the job in July, beginning the formal recruitment process, this has yet to happen. A spokesperson for the Treasury said: “We will begin recruitment for the next governor of the Bank of England in due course.”
