Would Sir Mervyn get the same job now? Don’t bank on it

It has been called the biggest appointment the coalition government will ever make – and the most powerful job ever advertised in Britain.

Bank of England Governor Sir Mervyn King’s retirement from the post comes as the institution prepares for major changes to its remit.

We know what kind of successor the government is looking for, because the £300,000-a-year role has been advertised in the press for the first time.

After nine controversial years at the helm, does Sir Mervyn’s own CV still match up with the job description? If he changed his mind and re-applied, would he get the job? Or will the next governor be someone completely different?

The next governor will technically be appointed by the Queen, but the decision will be a highly political one. What kind of person is the government hoping to attract?

Job description

“The successful candidate will have experience of working in, or with, a central bank or similar institution; or will have worked at the most senior level in a major bank or other financial institution.

“He or she will demonstrate strong leadership, management and policy skills; will have an advanced understanding of financial markets and good economic knowledge. He or she will be a strong communicator, have good interpersonal skills and will be a person of undisputed integrity and standing.”

Sir Mervyn certainly had the central bank experience. He entered the Old Lady of Threadneedle Street in 1991 after nearly 25 years in academia, including stints at Cambridge, Harvard, Birmingham and the London School of Economics.

He had worked at the bank for 12 years before being appointed governor, and being an internal candidate could still be a big advantage. According to the bookies Paul Tucker, Sir Mervyn’s deputy, is the favourite to take the top job.

Notably absent from Sir Mervyn’s CV is a spell working in finance, something the new job description suggests will as much weight as central bank experience with the next governor’s employers.

Market virgin

Some Threadneedle Street-watchers think it inconceivable that the next governor will be similarly unversed in the dark arts of the markets, even if, like Sir Mervyn, they are a world-class economist.

Dan Conaghan, author of The Bank: Inside the Bank of England, told us: “One forgets that (previous governor) Eddie George felt guilty about bringing Mervyn into the Bank because he thought that if he stayed in academe he could win a Nobel Prize. We will remember him as a brilliant economist but not as a pragmatic central banker.

“When Mervyn was appointed none of us registered it, in a way. There was only one other person seriously considered for the job (Sir Andrew Crockett). We expected governors to come and go and be unexciting and unknown and unremarkable.

“Now the markets have demonstrated how they can exert this tremendous power over the rest of us, and you cannot have somebody who is just an economist as a central bank governor. We have massive integrated interconnected global financial instruments on a scale that could not even have been contemplated in 2003.”

This chimes with former Alistair Darling’s thoughts on Sir Mervyn. In his memoir Back from the Brink, the former chancellor wrote: “The lack of relationship between Mervyn King and the bankers had become a real problem. Things had been different in the days when Sir Eddie George was governor. He was a man who knew the markets intimately.”

Runners and riders

If in-the-trenches knowledge of the markets really is a prerequisite, that would appear to rule out some of the contenders for Sir Mervyn’s throne.

Sir John Vickers, former chair of the Independent Commission on Banking, is currently 20 to 1 to take the job but has a similar background to the outgoing governor, with no experience of high finance.

And Gus O’Donnell, former head of the civil service, has never worked in a central bank or a major financial institution. If the official job advert means anything, “GOD” is a non-starter.

But will an ex-banker be able to maintain the necessary distance from the City lobby as the bank prepares to take on new regulatory powers?

It will be a difficult balancing act, as the job advert makes clear, specifying a candidate who will inspire “confidence and credibility” in the markets as well as leading the Bank in its new incarnation as a City watchdog?

Heart of the crisis

Has Sir Mervyn pulled it off? He has attracted both the ire of bankers over his outspoken criticism of bonus culture, and been attacked by left-of-centre critics like monetary policy committee alumnus David Blanchflower for failing to bring in tighter regulation.

Mr Darling, his sternest critic, might even doubt whether the outgoing governor had the necessary “interpersonal” and communication skills, calling him “amazingly stubborn and exasperating” to work with.

But few could have foreseen in 2003 how a low-profile economist would find himself at the heart of a crisis that could have spelled the collapse of the banking system.

Fellow economists remain fiercely divided over the decisions Sir Mervyn made as the credit crunch bit. Was he right to delay pumping money into failing banks in 2008 while warning of the “moral hazard” of making others pay for the bankers’ mistakes? Is quantitative easing working?

If the old job was hard, the new one, with its added regulatory responsibilities, is an almost impossible challenge, according to Dan Conaghan.

“You need somebody who is, to repeat a word that has been used, superhuman. It’s really a job that is almost too big for one person,” he said.

Again, this echoes Alistair Darling, who has said: “We should look around the world. It’s a huge job. It requires a superhuman and I’m not sure we’ve got that many in this country. There are good candidates in other parts of the world.”

Chief among the foreign contenders is Mark Carney, currently governor of the Bank of Canada. He has explicitly ruled himself out of the running, but is still among the bookies’ favourites.

Whoever decides to apply will no doubt pore over the job description (the closing date is 8 October, if you fancy your chances).

Something not stated as a key requirement, but obvious to anyone who reads between the lines, is the ability to walk a tightrope.