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Mark Carney 'willing to stay' at Bank of England after Brexit - business live Mark Carney 'willing to stay' at Bank of England after Brexit - business live
(35 minutes later)
The Treasury have declined to comment on Mark Carney’s comments today, but have confirmed that an announcement will come in due course.
The committee have moved away from Mark Carney’s future, and onto the impact of artificial intelligence on the UK economy (are they suggesting the governor could be replaced by a robot?).
Q: How many jobs will be lost to the fourth industrial revolution?
Chief economist Andy Haldane says estimates for gross job losses range from 10% and 50% of the global workforce - as jobs are automated or entire professions are replaced with software.
Of course, you also need to factor in how many new jobs are created (coding all those robots etc)
But the big picture is that the gross job losses due to AI, big data, etc, the gross job losses will be “at least as large and possibly larger as in previous industrial revolutions”, Haldane adds.
Here’s our news story on governor Carney’s pledge to help Britain through Brexit by serving longer at the Bank of England:
Mark Carney has confirmed he is in talks with the Treasury over staying on at the Bank of England to smooth any potential fallout from Brexit.
Dropping the broadest possible hint he could remain at Threadneedle Street beyond his scheduled departure date in June, the Bank of England governor said: “Even though I have already agreed to extend my time to support a smooth Brexit, I am willing to do whatever else I can in order to promote both a smooth Brexit and an effective transition at the Bank of England.”
Carney confirmed he had held talks with the chancellor, Philip Hammond, over his future, and said an announcement would be made by the government “in due course”.
Speaking to MPs on the Treasury committee, tasked with scrutinising appointments at the central bank, he said: “I am signalling a willingness to do whatever I can to support this process.”...
More here:
Charlie Elphicke MP disputes the Bank’s claim that food prices would surge if Britain left the EU without a deal next year.
Q: Couldn’t the UK set its own tariffs, meaning cheaper food imports from countries outside the EU?
Carney says that any such cut in tariffs would be countered by a slump in sterling after a no-deal Brexit (driving up imports).
There’s not much reaction in the financial markets to Mark Carney’s offer to serve longer at the Bank of England.
The pound is still down 0.25% against the US dollar today, at $1.284.
Curious that sterling #GBP has barely budged since #BoE gov Carney announced his willingness to stay on in the role past next summer pic.twitter.com/4HlZ7FfS6q
I guess that’s because a) there’s no actual announcement yet, b) the City’s concerns about Brexit extend well beyond the identity of the Bank of England governor, and c) most currencies have slipped against the US dollar today.
Mary Carney weighs in too -- he says that it is unlikely that Britain would leave the EU without a deal or a transition deal in March.Mary Carney weighs in too -- he says that it is unlikely that Britain would leave the EU without a deal or a transition deal in March.
But if that unlikely scenario does happen, the Bank would do what it could to mitigate the impact on UK real incomes, the governor says.But if that unlikely scenario does happen, the Bank would do what it could to mitigate the impact on UK real incomes, the governor says.
However, there are ‘limits’ to how much the Bank could tolerate a slump in the pound (in other words, it might be forced to raise interest rates to support sterling).However, there are ‘limits’ to how much the Bank could tolerate a slump in the pound (in other words, it might be forced to raise interest rates to support sterling).
The Treasury committee are now quizzing the Bank about the impact of a no-deal Brexit on the UK economy.The Treasury committee are now quizzing the Bank about the impact of a no-deal Brexit on the UK economy.
What might happen to food prices and the cost of living if we reach March 2019 without a deal between the UK and the EU, and both sides walk away?What might happen to food prices and the cost of living if we reach March 2019 without a deal between the UK and the EU, and both sides walk away?
Chief economist Andy Haldane says it would be a “material rise in the cost of things in the shops”, particularly items that are imported from overseas.Chief economist Andy Haldane says it would be a “material rise in the cost of things in the shops”, particularly items that are imported from overseas.
That would be due to a weaker pound and higher tariffs on those goods, he explains.That would be due to a weaker pound and higher tariffs on those goods, he explains.
Q: How long would that effect last for?Q: How long would that effect last for?
History shows that it often persists for several years, Haldane replies.History shows that it often persists for several years, Haldane replies.
Carney is asked about his warning last month that a no-deal Brexit is an “uncomfortably high” risk.Carney is asked about his warning last month that a no-deal Brexit is an “uncomfortably high” risk.
Q: Does that mean that it’s now a 60:40 chance? [as trade secretary Liam Fox claimed].Q: Does that mean that it’s now a 60:40 chance? [as trade secretary Liam Fox claimed].
Carney replies that this isn’t what he meant. Brexit negotiations are approaching a critical time, and thus the bank’s Financial Policy Committee is very focused on the risks.Carney replies that this isn’t what he meant. Brexit negotiations are approaching a critical time, and thus the bank’s Financial Policy Committee is very focused on the risks.
Mark Carney is also asked about the resignation of TSB chief executive Paul Pester this morning, following its IT meltdown.Mark Carney is also asked about the resignation of TSB chief executive Paul Pester this morning, following its IT meltdown.
He replies that senior managers must “absolutely” take responsibility for failures on their watch - be they conduct, operational or financial.He replies that senior managers must “absolutely” take responsibility for failures on their watch - be they conduct, operational or financial.
“Responsibility has now been taken” for a series of quite fundamental failings that have disadvantaged many customers and hurt confidence in TSB, he continues coldly (is he suggesting Pester should have quit earlier?)“Responsibility has now been taken” for a series of quite fundamental failings that have disadvantaged many customers and hurt confidence in TSB, he continues coldly (is he suggesting Pester should have quit earlier?)
We look forward to a new team being put in place, the governor continues briskly.We look forward to a new team being put in place, the governor continues briskly.
Q: Has the governor given any thought to who might (eventually) succeed him?Q: Has the governor given any thought to who might (eventually) succeed him?
Mark Carney declines to suggest a shortlist, saying only that there are “many qualified candidates”.Mark Carney declines to suggest a shortlist, saying only that there are “many qualified candidates”.
Then, rather interestingly, he says there are “some advantages” to running the recruitment process at a time when both sides have “full knowledge of the exact form of Brexit” which the country has chosen.Then, rather interestingly, he says there are “some advantages” to running the recruitment process at a time when both sides have “full knowledge of the exact form of Brexit” which the country has chosen.
In other words: It’s rather hard to recruit a world-class central banker to run the Bank of England when you don’t know whether Britain will crash out of the EU without a deal before they even get their feet under the desk....In other words: It’s rather hard to recruit a world-class central banker to run the Bank of England when you don’t know whether Britain will crash out of the EU without a deal before they even get their feet under the desk....
Some snap reaction to Mark Carney’s comments:Some snap reaction to Mark Carney’s comments:
The interesting thing here is that he has made the offer to stay on, but @hmtreasury hasn't accepted it yet https://t.co/kGFfyOnsmzThe interesting thing here is that he has made the offer to stay on, but @hmtreasury hasn't accepted it yet https://t.co/kGFfyOnsmz
Looks that #Carney will extend #BOE term. When asked if will stay longer as Governor says I am willing to do whatever else I can to promote smooth #Brexit Have discussed it with #Chancellor & announcement will be made in due courseLooks that #Carney will extend #BOE term. When asked if will stay longer as Governor says I am willing to do whatever else I can to promote smooth #Brexit Have discussed it with #Chancellor & announcement will be made in due course
Carney hasn't explicitly said he's willing to stay on, but he also hasn't unequivocally ruled out it either. #gbpCarney hasn't explicitly said he's willing to stay on, but he also hasn't unequivocally ruled out it either. #gbp
Unfortunately, Mark Carney has declined to reveal his decision today - after all, it’s the chancellor’s decision to announce.Unfortunately, Mark Carney has declined to reveal his decision today - after all, it’s the chancellor’s decision to announce.
I’ve “made them aware of my willingness” to do what I can to help, he adds.I’ve “made them aware of my willingness” to do what I can to help, he adds.
Carney adds that “It is a privilege to work at the Bank of England”.Carney adds that “It is a privilege to work at the Bank of England”.
Treasury committee member Wes Streeting has welcomed Carney’s comments.Treasury committee member Wes Streeting has welcomed Carney’s comments.
Mark Carney confirms to @CommonsTreasury that he is in discussions with Treasury about extending his term beyond his anticipated departure date in June 2019. Makes sense, in my view, in light of Brexit and the sooner we have clarity on this the better.Mark Carney confirms to @CommonsTreasury that he is in discussions with Treasury about extending his term beyond his anticipated departure date in June 2019. Makes sense, in my view, in light of Brexit and the sooner we have clarity on this the better.
[For anyone just tuning in... Mark Carney is currently due to leave the Bank in nine months time. He was originally due to depart this summer, but in 2016 he agreed to stay on until June 2019. Now a further extension is on the cards...][For anyone just tuning in... Mark Carney is currently due to leave the Bank in nine months time. He was originally due to depart this summer, but in 2016 he agreed to stay on until June 2019. Now a further extension is on the cards...]
Nicky Morgan begins the session by joking that today’s session hasn’t attracted much press attention -- and then reads out a stream of headlines about Mark Carney’s future at the Bank of England.Nicky Morgan begins the session by joking that today’s session hasn’t attracted much press attention -- and then reads out a stream of headlines about Mark Carney’s future at the Bank of England.
Can he shed any light on whether he’d stay longer at the Bank?Can he shed any light on whether he’d stay longer at the Bank?
Governor Carney replies that at this “critical period” it is “important that everyone does everything they can to help with the transition of exiting the European Union”.Governor Carney replies that at this “critical period” it is “important that everyone does everything they can to help with the transition of exiting the European Union”.
That includes parliamentarians, business people and central bankers.That includes parliamentarians, business people and central bankers.
Carney says:Carney says:
Accordingly, even though I have already agreed to extend my time to support a smooth Brexit, I am willing to do whatever else I can in order to promote both a smooth Brexit and an effective transition at the Bank of England.Accordingly, even though I have already agreed to extend my time to support a smooth Brexit, I am willing to do whatever else I can in order to promote both a smooth Brexit and an effective transition at the Bank of England.
That sounds like a heavy hint that he’d stay at the Bank, beyond June 2019 - his current exit date.That sounds like a heavy hint that he’d stay at the Bank, beyond June 2019 - his current exit date.
Carney adds that he has already discussed this issue with the chancellor, Philip Hammond, and he expects an announcement to be made in due course.Carney adds that he has already discussed this issue with the chancellor, Philip Hammond, and he expects an announcement to be made in due course.
More to follow!More to follow!
Parliament’s Treasury committee has begun its hearing with Bank of England governor Mark Carney.
He’s accompanied by chief economist Andy Haldane, and Monetary Policy Committee member Silvana Tenreyro.
On the agenda: Last month’s interest rate rise, the outlook for UK growth and inflation, and the state of the economy.
Brexit, and Carney’s own future, will surely also come up too.....
The session is being streamed here.
Joel Hills of ITV News reckons Mark Carney wasn’t considering an an extra shift at the Bank of England two months ago.
On July 5th, during an interview in Newcastle, I asked Mark Carney if he would consider extending his term at @bankofengland. He looked 1) very surprised to be asked the question (so much so he didn’t answer it) 2) completely unenthused by the idea.
But perhaps things have changed, now the Treasury have been (apparently) proposing the governor stays in post until 2020.
Just an hour to wait until MPs on the Treasury committee grill Mark Carney about the possibility of extending his contract beyond June 2019.
Craig Erlam of City trading firm OANDA suggests the governor might refuse to be drawn about the issue today (he’s officially there to discuss August’s inflation report).
Carney’s appearance before the Treasury Select Committee on Tuesday comes with an additional twist, following reports that the Treasury is trying to persuade him to extend his term – which ends in the middle of next year - by another 12 months. Carney has already agreed to one extension in order to oversee the Brexit process and the government is clearly hopeful that he will contemplate one more so as to provide some source of stability in otherwise uncertain times.
He hasn’t been the most popular of Governors, primarily among Brexiteers, who are still angry about his predictions on the economy prior to the referendum in the event of a vote to leave.
You have to wonder why Carney would choose to remain in the hot seat given the hand he’s been given and the constant criticism he’s received. Perhaps this is one reason why efforts are being made to retain him for now, it can’t be one of the most sought after jobs at the minute.
The Press Association have compiled a handy Q&A on the IT crisis at TSB.
Q: Why has TSB come under the spotlight? A: Problems erupted following a migration of customer data from former owner Lloyds’ IT system to a new one managed by TSB’s current owner Sabadell.Up to 1.9 million people using TSB’s digital and mobile banking found themselves locked out of their bank accounts. Some customers were unable to access their cash or pay bills - while others reported being able to see other people’s accounts.The Information Commissioner’s Office, which monitors data and privacy, previously said it was looking into the situation. MPs on the Treasury Committee heard from the bank in April that 40,000 complaints were received over a 10-day period.
By the end of July, over 135,000 complaints had been logged.
Q:What about people who have incurred charges because of the hitches? A: TSB has promised that its customers will not be left out of pocket as a result of the glitches. They can raise a complaint with the bank, and if they are still unhappy after giving it a chance to respond they can complain to the Financial Ombudsman Service, which resolves disputes between consumers and firms.
Q: Have other problems emerged? A: MPs have voiced strong concerns over how the problems were handled and fears were also raised about some people being targeted by fraudsters following the IT issues. The saga took another twist when it emerged some former TSB customers had found their direct debits had been cancelled and firms were apparently told that they had died.And customers of the bank have faced further frustration just this week, with many unable to access their accounts on Monday.
Q: What indications have there been as to how TSB’s customers are feeling about the bank? A: A recent survey from MoneySavingExpert.com saw TSB tumble down the website’s rankings in terms of customers’ satisfaction with their bank.MoneySavingExpert.com said last week that TSB had plummeted from 4th to 11th place in its latest banking customer service survey, which the consumer help website carries out twice a year. Some 49% of those who graded TSB said its service was poor and just 23% deemed it great. Meanwhile, a separate survey carried out in July for GoCompare Money found 16% of TSB customers surveyed are considering switching banks.
Jonathan Reynolds MP, Labour’s Shadow Treasury Minister, has also welcomed Paul Pester’s exit, saying:
“TSB customers have suffered inexcusable levels of disruption and received service which has fallen far short of accepted standards. It is right that the most senior person at the bank has been held accountable for this.
“A decade on from the financial crisis, senior individuals taking responsibility in this way will be an essential building block of restoring public trust in our banking sector.”
Here’s Angela Monaghan’s news story on the shake-up at TSB (and its latest technology problems).
TSB have written to Treasury committee chair Nicky Morgan MP, confirming that Paul Pester has stepped down (three months after the committee said they’d lost confidence in him).
They may not have much confidence in Pester’s replacement either; executive chairman Richard Meddings apparently thinks it’s 2019!
Not a great look from a bank trying to shake off a reputation for IT problems.
I don’t imagine the right honourable member for Loughborough appreciates being hailed as “Morgan” either!
In reply, Nicky Morgan has welcomed Pester’s departure...and warned that that bank’s problems aren’t over.
The Committee remains concerned about the continuing problems at TSB, including unacceptable delays in compensating customers who have been badly let down. It is to be hoped that Dr Pester’s successor is able to restore the confidence of the bank’s long-suffering customers”.
South Africa’s lurch into recession is a blow to new prime minister Cyril Ramaphosa, who succeeded Jacob Zuma earlier this year:
Ramaphosa Starts With a Recession, Just Like Zuma Nine Years Ago. @business #SouthAfrica $USDZAR pic.twitter.com/dkEy8rQaxQ
Newsflash: South Africa has fallen into recession.
New figures show that the country’s GDP shrank by 0.7% in the second quarter of 2018 - news which is sending currency into a fresh dive.
Economists had expected growth of around 0.6%, after a sharp slump earlier this year. Instead, South Africa has now racked up two consecutive quarterly contractions - the classic definition of a recession.
The South African #economy slipped into a #Recession as economic activity declined by 0,7% in Q2:2018 q/q after a 2,6% decline in Q1:2018 #StatsSA #GDP https://t.co/KjOdmHB0yN pic.twitter.com/aBnPccETmP
The South African rand has promptly slumped by 2% against the US dollar, extending its earlier losses.
South African rand loses more ground against U.S. dollar after GDP data pic.twitter.com/jbJpN6t0ct
Blane Perrotton, managing director of property consultancy and surveyors Naismiths, spies an “uneasy calm” in Britain’s building sector.
Here’s his take on drop in the UK construction PMI in August:
“Though levels of optimism have sagged, construction firms continue to hire, though this is likely to be driven by the need to get existing projects completed rather than a great bet on future demand.
“With Brexit storm clouds still looming on the horizon, the current modest progress is as much as can be expected – especially in the South East.
“Other markets are looking more buoyant – particularly the West Midlands and Bristol – but as the countdown to Brexit enters its final months, businesses’ gnawing sense of uncertainty will continue to peg back levels of investment. In that context, a steady ship should be seen as a real achievement.”
Financial analyst Emanuele Canegrati of BP Prime says the PMI is much weaker than expected.
UK Construction #PMI Plunges to 52.9 in Aug. from 55.8 in July. A very surprising Decline, as Analysts expected 54.9. Now it is only 2.9 away from the 50 threshold. The indicator is historically a reliable predictor for future recession when it falls below 50 @graemewearden
But Max Jones of Lloyds Bank Commercial Banking is more optimistic:
“Recent results from contractors indicate some softness in civil engineering and sentiment here has not been helped by last week’s announcement that Crossrail project is behind schedule.
“Yet even if the UK’s current infrastructure pipeline may not be quite as bulging as some would hope, mega-projects like Heathrow, Hinkley Point and HS2 continue to offer quality work for firms right down the supply chain. Importantly, minds are focused on discipline, with anecdotal evidence that firms are holding prices during bidding negotiations.
“If the commercial market still looks fragile, much of this has to do with fears about the London market. Confidence in the capital remains intrinsically tied to Brexit, so any developments or certainty in negotiations will be warmly welcomed.”
Growth in Britain’s construction sector has hit a three-month low in August, a new survey shows.
Housebuilding growth slipped to its weakest rate since March, according to data firm Markit. That won’t provide the new homes needed to tackle the UK housing shortage.
Civil engineering output was also disappointing, and actually fell in August, while commercial building work accelerated.
This pulled Markit’s construction PMI down to 52.9, much weaker than July’s 55.8. That’s not far from the 50-point mark showing stagnation.
It means builders could take breather after a busy few months, as Tim Moore, associate director at IHS Markit, explains:
“The construction sector slipped back into a slower growth phase in August, with this summer’s catch- up effect starting to unwind after projects were delayed by adverse weather at the start of 2018.
“Civil engineering was the worst performing area of the construction sector, with output in this category falling for the first time since March amid reports citing a lack of new work on infrastructure projects.
House building saw a particularly sharp slowdown since July, meaning that commercial construction was the fastest growing sub-sector in August.