Mark Carney has confirmed he is in talks with the Treasury over staying on as governor of 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 he was willing to do whatever he could to ensure a trouble-free departure from the EU.
Speaking to MPs on Tuesday, Carney 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.”
The Canadian national has already agreed to delay his departure once, having announced in the wake of the referendum vote that he would shift his planned end date from mid-2018 to mid-2019.
Carney confirmed on Tuesday 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”.
He told MPs on the Treasury committee, tasked with scrutinising appointments at the central bank: “I am signalling a willingness to do whatever I can to support this process.”
Although the Treasury refused to respond directly to his comments, it confirmed an announcement would be made in due course, without giving details about the timing.
Carney said he could not pre-empt the government by making an announcement at the Treasury committee hearing. However, he said he had told the government of his “willingness to do what I can to support the process [of Brexit]”.
The comments from the governor come in the wake of mounting speculation over his future, with reports suggesting he could extend his tenure until 2020. Downing Street had initially played down the reports, which suggested the government had found it difficult to find suitable replacements, saying the plan was still for him to leave in 2019.
Carney never agreed to serve the usual eight years when he joined the Bank in 2013, and initially signed on for five years, but the Brexit vote has already served to extend his commitment to the job.
Several MPs and investors in the City of London have welcomed the idea of Carney extending his term, arguing it would provide much needed stability for the UK while leaving the EU. There is also mounting concern the dwindling chances of a smooth Brexit have complicated the search for his successor.
Highlighting those fears, Carney told the MPs there would be advantages both for the government and applicants to know the “exact form of Brexit the country has decided to take”.
Responding to the governor’s comments, Nicky Morgan, the chair of the Treasury committee, said “stability is vital during this important period”, while telling the government to provide clarity as quickly as possible.
Extending the governor’s term would risk infuriating Brexiters who have been highly critical of his tenure and his repeat warnings over the potential hit to the economy from a no-deal Brexit.
Jacob Rees-Mogg, a staunch critic of the governor, told the Guardian last week the Treasury should not extend his term. “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.
Carney reiterated his warnings on Tuesday over the risks from Brexit, telling MPs a no-deal scenario could trigger a renewed drop in the pound, causing higher levels of inflation and squeezing the wages of British workers. “It is likely the real income squeeze will return for households across the country,” he said.
The Bank might need to raise interest rates in such a scenario, he said, while warning a hard Brexit would take several years for the British economy to adapt to, with negative consequences for living standards and business investment.
“From a monetary perspective we would look, subject to our remit, to do what we can do to support and ease that adjustment. But there are limits to what we can do,” he said.
