Bank of England governor Mark Carney has extended his term to June 2019 when the Brexit negotiations are expected to be completed.
Carney’s decision means he will serve one year more than the five he had originally committed to, but he will depart two years short of a full eight-year term.
In a letter sent to Chancellor Philip Hammond following a two-hour meeting with Prime Minister Theresa May yesterday, Carney said the move “recognised the importance to the country of continuity” during Brexit negotiations and that he wanted to “contribute to securing an orderly transition to the UK’s new relationship with Europe”.
Hammond, who welcomed the move, said Carney’s decision would enable him to continue his “highly effective leadership of the Bank through a critical period for the British economy”.
The news comes after speculation Carney would step down before the end of his mandate amid sustained criticism over comments made in the run-up to the EU referendum.
In an appearance at the House of Lords last week Carney said whether he will stay in his role or not is “‘an entirely personal decision” and that “no one should read anything into that decision in terms of Government policy”.
But IHS Global Insight chief UK and European economist Howard Archer argues it would have been “optimum” if Carney extended his mandate until 2021 as the UK economy “clearly faces a prolonged very challenging period ahead”.
He says Carney was justified in warning of the potential risks of Brexit to the UK economy.
Archer says: “Yes, the Bank was too pessimistic in its analysis of what was likely to happen to the economy in the immediate aftermath of a Brexit vote, but so were the vast majority of economists.
“Indeed, 2017 could well be a much more difficult year for the UK economy as the fundamentals for consumers are likely deteriorate appreciably and the triggering of Article 50 brings Brexit more out into the open and likely magnifies uncertainties.”