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George Osborne's ambitions over IMF top job prompt criticism George Osborne's ambitions over IMF top job prompt criticism
(about 4 hours later)
George Osborne’s interest in running the International Monetary Fund has met immediate criticism because of the former chancellor’s austerity policies and Brexit-related question marks over the UK’s international standing.George Osborne’s interest in running the International Monetary Fund has met immediate criticism because of the former chancellor’s austerity policies and Brexit-related question marks over the UK’s international standing.
The former chancellor has signalled to friends that he views himself as a potential candidate to replace Christine Lagarde, the current head of the Washington-based fund, who was nominated to lead the European Central Bank this week. Osborne, the editor of the Evening Standard, has signalled to friends that he views himself as a potential candidate to replace Christine Lagarde, the current head of the Washington-based fund, who was nominated to lead the European Central Bank this week.
However, his role as the architect of austerity was highlighted on Thursday as being badly out of step with the needs of the global economy, while the IMF has gradually also begun to distance itself from a fiscal approach that requires heavy cuts to public spending.However, his role as the architect of austerity was highlighted on Thursday as being badly out of step with the needs of the global economy, while the IMF has gradually also begun to distance itself from a fiscal approach that requires heavy cuts to public spending.
George Osborne 'aiming for new role as head of IMF' Christine Lagarde’s nomination to run the European Central Bank has prompted speculation over who could replace her as managing director of the International Monetary Fund.
John McDonnell, the shadow chancellor, told the Guardian that the use of austerity had hindered the UK’s recovery from the financial crisis. He said: “Before the decision is made on any IMF appointment, consideration should be made to the fact that George Osborne was the architect of the slowest recovery from a recession since Napoleonic times. The former French finance minister is set to become president of the ECB from 1 November, should she win approval from Brussels. Her move will spark a round of international horse-trading over who should lead the global lender of last resort.
Here are some names in the frame:
Editor, Evening Standard
Suggested his candidacy to friends. The former UK chancellor is regarded as the architect of austerity in Britain, once favoured by the IMF but now out of fashion. Brexit could damage the chance of a Briton winning support from other nations. However, Osborne has close ties with China and the US and was a backer of Lagarde.
Governor, Bank of England
Canadian by birth, the Bank’s governor also has UK and Irish citizenship. Due to exit Threadneedle Street at the end of January, he has experience in international circles, having led the G20 Financial Stability Board. Highly regarded, he has moved to fight the climate crisis and his speeches chime well with the IMF’s outlook.
President, European Central Bank
The Italian economist could complete a job swap with Christine Lagarde when he leaves at the end of October. He was influential in preventing the breakup of the Eurozone. Aged 71, the IMF would need to change a rule that managing directors must be no older than 65.
Professor, Chicago Booth University
The former Indian central bank governor was previously chief economist at the IMF. Appointing him would prove symbolic: dismantling the tradition of a European leading the fund and recognising the rise of Asian economies. Rajan is also seen as a potential successor to Mark Carney at the Bank of England.
General manager, Bank of International Settlements
The Mexican economist is well regarded in international circles for his work at BIS, the central bankers’ bank. The unwritten code that a European leads the IMF could stand in his way. The former finance minister and head of the Mexican central bank has ruled himself out to succeed Carney.
Chief executive, World Bank
The Bulgarian economist was previously vice-president of the EU commission and currently runs the IMF’s twin institution, the World Bank, under its American president – David Malpass. A close connection to EU politics would help her candidacy. Richard Partington
John McDonnell, the shadow chancellor, told the Guardian the use of austerity had hindered the UK’s recovery from the financial crisis. He said: “Before the decision is made on any IMF appointment, consideration should be made to the fact that George Osborne was the architect of the slowest recovery from a recession since Napoleonic times.
“That’s hardly the record or qualification for someone to steer the ship of the global economy.”“That’s hardly the record or qualification for someone to steer the ship of the global economy.”
The IMF, which was a prominent advocate of austerity around the time Osborne was chancellor, has since drifted away from backing budget cuts as a means to balancing the books. Academics at the fund criticised neoliberal economics in an influential report three years ago, while Lagarde has urged greater public spending to promote economic growth. The IMF was a prominent advocate of austerity when Osborne was chancellor but has recently drifted away from supporting budget cuts to balance the books. Academics at the fund criticised neoliberal economics in an influential report three years ago, while Lagarde has urged greater public spending to promote economic growth.
Commenting on Osborne’s potential candidacy, Paul Diggle of the investment group Aberdeen Standard, said Osborne’s record of cutting government spending in a bid to achieve growth no longer dovetailed with the fund’s ethos. He said: “He is a big advocate for expansionary fiscal contraction and that is no longer in vogue at the IMF. His thinking doesn’t really chime with where the fund is at.”
Criticising the former chancellor, Paul Krugman, the Nobel-prize winning economist, tweeted: “Hey, why not? If Trump is nominating people who got everything wrong about monetary policy for the Fed, why not someone who insisted that austerity is expansionary for the IMF?”Criticising the former chancellor, Paul Krugman, the Nobel-prize winning economist, tweeted: “Hey, why not? If Trump is nominating people who got everything wrong about monetary policy for the Fed, why not someone who insisted that austerity is expansionary for the IMF?”
Britain’s status on the world stage on the back of acrimonious talks with Brussels over Brexit could also damage the chances of a Brit securing the support of other nations to run the IMF, which promotes cooperation between countries to drive economic growth. Britain’s status on the world stage amid acrimonious talks with Brussels over Brexit could also damage the chances of a Briton securing the support of EU leaders to run the IMF, which promotes cooperation between countries to drive economic growth.
Europeans have run the IMF since the second world war, in an unwritten understanding that allows for an American to lead its twin institution, the World Bank. George Osborne 'aiming for new role as head of IMF'
Europeans have run the IMF since the second world war, in an unwritten understanding that allows for an American to lead its twin institution, the World Bank. David Malpass, a US economist, was promoted by Donald Trump to take charge of the World Bank earlier this year.
Stefan Gerlach, a former deputy governor of the Central Bank of Ireland, warned that EU member states could object to the appointment of the first UK citizen to run the IMF while Brexit is taking place.Stefan Gerlach, a former deputy governor of the Central Bank of Ireland, warned that EU member states could object to the appointment of the first UK citizen to run the IMF while Brexit is taking place.
“It is difficult to imagine that in these pre-Brexit days, any UK candidate would enjoy the support of the EU. The temptation to show the benefits EU members have is too strong,” he tweeted.“It is difficult to imagine that in these pre-Brexit days, any UK candidate would enjoy the support of the EU. The temptation to show the benefits EU members have is too strong,” he tweeted.
Candidates to run the IMF need to be nominated, either by a member of its 24-strong executive board or by a representative of one of the 189 nations in the IMF sitting on its board of governors – usually a country’s finance minister or central bank governor. Osborne could, however, draw support from the US and China, where he had strong connections during his time as chancellor. He was also among Lagarde’s first major supporters for her leadership of the IMF.
Britain’s representative on the IMF executive board is Shona Riach, a former Home Office and Treasury official. On a par with France, the UK has 4% of voting rights in Fund decisions. The US has the most, with 16.5%, ahead of countries such as China, Japan and Germany. Osborne could still face stiff competition for UK-backing for his candidacy. The chancellor, Philip Hammond, represents the UK on the IMF board but is widely expected to be replaced when the next prime minister assumes office. An election would also cast serious doubt over Osborne’s candidacy.
Philip Hammond represents the UK on the IMF board, although he is widely expected to be replaced as chancellor when the next prime minister assumes office. The former chancellor has thrown the weight of the Evening Standard behind Boris Johnson’s bid for No 10, which could help in his campaign, although the 48-year-old is likely to run up against Mark Carney, the governor of the Bank of England, who could be a serious rival candidate for the IMF job with a wealth of global experience.
Osborne would likely face stiff competition from Mark Carney, the governor of the Bank of England, whom the former chancellor appointed to run Threadneedle Street back in 2013. Although Canadian by birth, Carney also holds UK and Irish citizenship. Appointed governor by Osborne in 2013, he is due to leave the Bank early next year. Carney is well regarded among international circles, having led the G20 response to the 2008 financial crisis as head of its Financial Stability Board.
Although Canadian by birth, Carney also holds British and Irish citizenship. He is due to leave the Bank early next year.
International Monetary Fund (IMF)International Monetary Fund (IMF)
George OsborneGeorge Osborne
EconomicsEconomics
Global economyGlobal economy
John McDonnellJohn McDonnell
AusterityAusterity
Economic policyEconomic policy
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