Time for a recap:

Mark Carney has taken a big step towards staying on as Bank of England governor to help Britain through the choppy waters after Brexit.

After days of speculation, Carney revealed that he had offered to do whatever he could to ensure Britain’s exit from the EU was smooth.

That’s a big hint that he could stay in post beyond June 2019 - potentially for another year, or even until the end of a Brexit transition period.

He told the Treasury committee that:

I am willing to do whatever else I can in order to promote both a smooth Brexit and effective transition at the Bank of England.

The chancellor and I have discussed this. I would expect an announcement to be made in due course.”

However, we don’t know exactly what Carney is proposing....

Carney also flagged up that it could be easier to appoint a successor once there is more clarity about Brexit, and insisted there’s no shortage of good candidates for one of the biggest jobs in central banking.

The Treasury has declined to respond, saying Mark Carney’s “speak for themselves”, but promised that an announcement is coming. Commitee chair Nicky Morgan is pushing for a quick decision.

Theresa May’s office has indicated that the PM wouldn’t oppose an extension to Carney’s contract, saying he has done a good job.

Carney also tried to placate Brexit-supporters, indicating that the prospect of Boris Johnson or even Jacob Rees-Mogg becoming PM wouldn’t shake his enthusiasm for the job.

Some City investors have welcomed the news, saying it would provide much-needed stability.

During the hearing at parliament, the Bank of England also warned MPs that a no-deal Brexit would drive up prices in the shops and send the pound tumbling (just the sort of comments that have upset Leave supporters in the past).

As Carney put it:

“It’s likely that the real income squeeze will return for households across the country.”

“You can’t avoid that medium-term impact on real incomes.”

There was little reaction in the markets to Carney’s offer, with the pound dipping against the US dollar today.

In other news...

• Amazon has followed Apple to become America’s second $1trn company (although shares have dropped back from their earlier peak).
  
• TSB CEO Paul Pester has (finally) paid the price for the bank’s IT meltdown.
  
• Growth in Britain’s construction sector has hit a three-month low
  
• South Africa has lurched into recession, sending its currency sliding again.
  

That’s all for today. Thanks for reading and commenting. GW

The Treasury committee hearing has wrapped up.

And across the road in Westminster, Theresa May’s spokeswoman has confirmed that an announcement on Mark Carney’s future is being worked on.

Reuters has the details:

British Prime Minister Theresa May thinks Mark Carney has done a good job as governor of the Bank of England, her spokeswoman said on Tuesday, adding that there would be further announcements on the matter.

“The prime minister obviously thinks he has done a good job in his time as governor, and there will be more to say on that in due course,” the spokeswoman told reporters.

Carney said earlier he was ready to extend his time in charge of the central bank to help Britain’s economy as it leaves the EU.

Q: How vulnerable is sterling to a sudden devaluation?

Mark Carney takes a ‘glass half-full’ approach. He thinks the pound is currently suffering from the risk of a no-deal Brexit, so it might rise if an agreement and a transition deal is reached.

But if that doesn’t happen, the pound would move the other way, he explains.

Quilter Investors head of investment, Anthony Gillham, believes the UK government should accept Mark Carney’s offer to stay longer at the Bank of England.

Gillham concedes that Carney hasn’t be “universally popular” (particularly with Leave supporters, who have hated his warnings about Brexit).

But even so, Britain would benefit from an experienced hand at the top of the Bank in the likely turbulent times ahead.

Gillham writes:

“Central banks have done a lot of heavy lifting over the last decade in an effort to restore economic stability, although they have often been required to swim upstream against a current of destabilising political uncertainty. As if to illustrate the point, despite the Bank of England’s efforts to protect sterling over the summer, we have seen the pound chasing up positive sentiment around Brexit, before following it back down when the political rhetoric changes.

“If Mark Carney’s tenure is extended he will have his work cut out, but the case for an experienced captain to guide the UK through dangerous waters has grown stronger as Brexit negotiations have dragged on. He will install a measure of certainty on monetary policy, which provides some air cover through what will surely be an unpredictable spell. As Bank of England governor Mark Carney hasn’t always been universally popular, but appointing him as temporary caretaker through this period of transition does make sense.”

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:

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?

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.

Q: How long would that effect last for?

History shows that it often persists for several years, Haldane replies.

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”.

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....

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?

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.

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.

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.

More to follow!

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”.

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.

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.

Several senior economists are unimpressed by the swirling uncertainty over Mark Carney’s future.

Professor Costas Milas of the University of Liverpool’s management school, argues that the governor should pledge to stay until 2021. That would be the typical eight-year term, rather than Carney’s planned six-year stint [ending in June 2019].

In a letter to the FT, professor Milas says this is the wrong time for a change of governor:

The rumour is that Mr Carney is considering a “Treasury request to serve another year as governor”. This will make it a seven-year service at the bank rather than the eight-year service advertised by the Treasury back in 2012.

Assuming that the rumour is a fact, the Treasury is indeed correct in asking Mr Carney to continue as governor at the bank. A critical, yet unwritten, rule of football is never substituting a player — let alone your (monetary policy) captain — when defending a corner.

Indeed, with Brexit headwinds remaining quite strong, this is not the time to replace the governor. That said, Mr Carney needs to commit to his full eight-year tenure. He is not a player on loan where he has the luxury to extend by one year and then by another one. As simple as that.

However, former Bank of England policymaker Andrew Sentance has criticised the “charade” around the governorship. He argues that the independence of the Bank is at risk:

Alison McGovern MP reminds us that the Treasury committee asked TSB to consider Pester’s position three months ago.

Still, at least they got today’s announcement out....

Breaking: Paul Pester, the boss of TSB, has resigned - as the bank is struck by ANOTHER tech meltdown.

In a statement, the bank says:

The Board of TSB Bank Plc has today announced that after 7 years as CEO, Paul Pester will be stepping down from his position and leaving the company.

Richard Meddings, current Non Executive Chairman of TSB, will take on the role of Executive Chairman with immediate effect in order to enable a full public search to commence for a new CEO.

Whilst there is still work to do to achieve full stability for customers, TSB’s systems and services are much improved since the bank’s IT migration earlier this year. Paul and the Board have therefore agreed that this is the right time for Paul to step down and to appoint a new CEO for TSB.

More to follow....

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Mark Carney was described as the “the outstanding central banker of his generation” when he was dramatically appointed as Bank of England governor in 2012. Since then, he’s been called everything from the “high priest of Project Fear” to the “George Clooney of finance”

Now, with his stint at the Bank almost over, could the so-called “unreliable boyfriend” change his mind again?

There’s growing pressure on Carney to stick around longer at the Bank, rather than leave in June 2019 as planned. This would let him help the UK through the Brexit transition (or do I mean upheaval?), and calm the markets.

The rumour mill is working overtime, with the Treasury and the Bank of England apparently in discussions about Mark Carney staying on longer as governor.

Britain’s Treasury committee will try to get to the bottom of the situation today, when they question the governor about last month’s interest rate rise.

Some MPs are hoping that Carney could be persuaded to extend his stint in London longer, even though he’s planned to return to Canada for family reasons.

Stewart Hosie, a Scottish National Party MP on the committee, told us:

“It wouldn’t be a surprise at all if a member would ask [about Carney’s future].

Carney has done a very good job in what, in many cases, have been very difficult economic circumstances. There would be a lot of merit in the chancellor asking him to extend his term should that be the decision the chancellor were to take.

Brexit-loving MPs, though, won’t relish the thought of Mark Carney remaining (so to speak) at the Bank for longer, given his warnings about the cost of leaving the EU.

The agenda

• 9.30am BST: UK construction PMI for August
  
• 1.15pm BST: Treasury Committee hearing with BoE governor Mark Carney, chief economist Andy Haldane and MPC member Silvana Tenreyro