Bloomberg News

Osborne’s Surprise ‘Maple Syrup’ Choice Can Only Win Praise

November 26, 2012

Central Bank of Canada Governor Mark Carney

Mark Carney, a 47-year-old former Goldman Sachs Group Inc. managing director, will become the first foreigner to run the 318-year-old institution as it absorbs new powers to oversee banks. Photographer: Norm Betts/ Bloomberg

George Osborne sprang a surprise with his choice of Mark Carney as Bank of England governor yesterday. He got a surprise of his own a few minutes later when Labour’s Ed Balls had only praise for the chancellor’s decision.

Osborne named Carney, the head of the Bank of Canada, to succeed Mervyn King, wrong-footing bookmakers who’d installed Bank of England Deputy Governor Paul Tucker as favorite. The chancellor, while acknowledging the qualities of British candidates, decided he needed someone untainted by the U.K.’s recent financial turmoil to lead the beefed-up central bank.

Balls, Osborne’s opposite number in the opposition Labour Party, was only able to shake his head, before standing up to welcome the appointment. “In my view this is a good choice, a good judgment, and his experience will be invaluable,” Balls said in what may be his first public praise of Osborne as chancellor. He’s likely to have to work with Carney if Labour wins power at the next national election in 2015,

Osborne’s announcement provided an increasingly rare day of praise for a government that, if it’s not being attacked in the House of Commons by Labour for a lack of economic growth, is drawing flak from its own rank-and-file supporters on the European Union.

“I’m so excited about this appointment that I could jump up and down,” Andrea Leadsom, a Conservative on Parliament’s Treasury Committee, told the chancellor. She had been critical of Tucker after questioning him earlier this year over his involvement in the Libor rate-rigging scandal.

Carney isn’t a household name in the U.K., though. When Tory Philip Hollobone asked what experience he had that might be useful, Labour’s Stephen Pound shouted, “maple syrup.”

First Foreigner

Carney, a 47-year-old former Goldman Sachs Group Inc. managing director, will become the first foreigner to run the 318-year-old institution as it absorbs new powers to oversee banks. He’ll replace King from July as policy makers pursue record-low interest rates and asset-buying to propel the economy from its first double-dip recession since the 1970s.

Osborne described Carney to the House of Commons as “quite simply the best, most experienced and most qualified person in the world to do the job.”

Andrew Tyrie, the senior Tory lawmaker who’s chairman of the Treasury Committee, described Carney as “an extremely talented” individual and “an experienced choice.”

Firewall Legislation

Osborne had a less easy time from lawmakers just six days ago, when he was testifying before the Parliamentary Commission on Banking Standards.

Members of that panel suggested his legislation to set up firewalls between banks’ retail and investment operations was lacking in specifics, and they expressed concerns the finance industry would water it down. Tyrie, who also heads that committee, suggested it had been difficult to get detail out of the chancellor.

The complete surprise element in yesterday’s announcement was in contrast to the government’s last big appointment. The naming of Justin Welby as Archbishop of Canterbury leaked out to newspapers ahead of time earlier this month.

Back in the Commons yesterday, Labour’s Ian Austin suggested that his party’s lead in the polls -- currently around 10 percentage points -- and the prospect of a change of government in 2015 might have helped persuade Carney to move across the Atlantic. “No,” Osborne replied.

Good Relations

Carney has had good relations with Canadian lawmakers from different parties. He did face criticism in 2010 from Thomas Mulcair, now opposition leader, for hiring an adviser from Goldman Sachs. While Mulcair said the appointment raised “a question of the revolving door back to the private sector,” Carney told lawmakers that all bank employees are bound by a code of conduct and a conflict-of-interest policy.

Osborne may find that it’s back to business as normal in the Commons on Dec. 5, when he makes his autumn statement on the economy and the public finances. The Institute for Fiscal Studies said yesterday he may have to announce the extension of his austerity program to 2018. It was originally penciled in to end in time for the 2015 general election.

Still, for an hour yesterday, the chancellor enjoyed praise from all sides. “Maybe we can bottle this cross-party consensus and use it on future occasions,” he said. “But I doubt it.”

To contact the reporters on this story: Robert Hutton in London at rhutton1@bloomberg.net; Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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