Mark Carney and I have been going back and forth for months to pin down a date — each of us having to cancel at least once. Fate was guiding us. The former governor of the Bank of England strolls into our New York venue at roughly the moment London’s markets are closing after the most brutal day in decades for the British pound and UK gilts.
It is Friday September 23 and sterling has been dropping precipitously since Kwasi Kwarteng, Britain’s then chancellor of the exchequer, unveiled a package of tax cuts funded by public borrowing. The previous day Andrew Bailey, Carney’s successor at the BoE, had raised interest rates by half a percentage point. Given the inflationary implications of Kwarteng’s “mini” Budget, that already seems too little. According to someone on Twitter, which I had been scrolling through as I waited for Carney, London forex traders have redubbed the pound “shitcoin” (a little over a week later, Liz Truss, the new prime minister, made a partial U-turn and the pound regained ground but her credibility may never do so).
In a deep blue suit and a plain dark tie, Carney greets me with a rueful smile. The Canadian-turned-British bigwig, now based back in Ottawa from where he was recruited, looks younger than his 57 years. “We certainly picked our day,” Carney says. “Are you paid in pounds or dollars?”
As Canada’s central bank governor during the 2008 global financial crisis, then Britain’s throughout Brexit, Carney is a veteran of crisis management. Truss’s theory, rubbished by most economists, is that lower taxes would kick Britain into higher growth and overcome its low-growth malaise. But as we approach the next moment of truth on her fiscal plans, markets remain deeply unsettled. UK government bonds came under pressure again this week before rallying amid speculation that Truss would change course; on Friday, she duly dismissed Kwarteng and reversed the planned cut to corporation tax.
When we meet, Carney makes the very different case that governments should bet on “solidarity” by cushioning people from shocks and investing in them. “If you’re sentient, you know what the last 12 years have taught us, particularly since Covid, is that it’s good to have some social support,” Carney says. “At the end of my governorship, we were finally enjoying positive real income growth. Following Covid and inflation, British average wages will probably not now get back to pre-2008 levels until 2025 at least. That’s two lost decades.”
Not a good moment to announce tax cuts, then? “What happened today — doubling down on inequality at a time of belt-tightening — was a surprising set of choices,” Carney says. A few days after our lunch, David Frost, Britain’s former Brexit negotiator and a Truss ally, describes Carney, along with the FT, former prime minister Gordon Brown and others, as part of the “international hectoring class”.
Though we are meeting in Tribeca, the heart of lower Manhattan, America’s week has been dominated by news from Britain. It began with Queen Elizabeth’s funeral at Westminster Abbey and is now closing with the humbling of the currency that bore her image for 70 years. Carney met the Queen several times during his time as BoE governor. While listening to BBC Radio 4 early one morning, he picked up stray trivia about aphids, the sap-sucking insects that plague Britain’s crops from time to time. Later that day Carney was introduced to the Queen at a palace garden event. She said something about troubles with her garden that year. “I reeled off several facts about aphids, which captured her attention,” Carney says. On another occasion, after Carney had given a speech on climate change, Prince Philip said: “I never knew you were a greenie,” to which Carney replied, “Just like your son sir.”
We are seated inside the Odeon restaurant, a bustling French bistro. Carney, whom I first met in London in the 1990s, moved with Goldman Sachs to New York later that decade. His loft apartment was round the corner: “Being here brings some nostalgia,” he says. This restaurant can also tell you the tale of the past 40 years, Carney says. It was opened in the shadow of the Twin Towers in the 1980s, when “greed is good” Wall Street culture was taking off. Robbed of the Twin Towers in the 9/11 terrorist attacks, the restaurant’s exterior is now fronted by Perspex-enclosed dining boxes — a feature of Covid-19. “September 11 and the pandemic were two big solidarity-inducing events,” he says. Solidarity is clearly the message Carney wants to send — both as policy advice to governments and as a feature of social-impact investing.
Twelve years as a central bank governor — five as Canada’s, seven as Britain’s, putting him in the unique category of having run monetary policy for two G7 countries — have given Carney’s language a protective layer. The past few hours have been too kinetic for abstractions. My goal is clear, as is the waiter’s, who has now returned three times to ask if we have decided.
“I guess we can’t do two things at once,” says Carney apologetically. For starters, he picks oysters. I choose a green salad. Since I’m being virtuous, Carney proposes that he take french fries over salad with the fines herbes omelette he wants for his entrée. He asks for extra tomatoes — pronounced with the short British “a”, I notice. “I’m just trying to make you feel comfortable,” Carney says. I’d feel even better if you have a glass of wine, I reply. “That seems like a fair exchange.” Carney goes for Pinot Grigio. I pick Sauvignon Blanc. “This is a perfect example of solidarity — co-
operative ordering,” says Carney with a smile.
Has he seen the comment by Lawrence Summers, the former US Treasury secretary, who labelled Britain a “submerging market”? He pauses: “It’s a challenging position without question, it’s an unorthodox strategy the government is pursuing at this point in time.”
In 2016, Britain’s economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent. And that’s before today
Come on, I say, today’s move was fiscally reckless and political suicide. “‘Submerging’ is a bit strong,” he replies. “Look, we could spend 20 minutes listing all the strengths of Britain. All the liabilities are in the local currency and all the assets are in foreign, which are natural hedges and that is not the case in any emerging market. The institutional structures are there. We just had a reminder with the passing of the head of state.”
Minus the Queen’s death, couldn’t you reel off the same attributes of Britain in 1976, when it was forced to seek an IMF bailout? “The UK’s institutions were more sclerotic in 1976,” he says. “There was a reason for some of Margaret Thatcher’s reforms. The labour market today is more robust and the Bank is operationally independent.”
Should I convert my savings (such as they are) from dollars into pounds? “I don’t give investment advice,” Carney says with an apologetic shrug. I decide to leave the pound to one side. We are co-operatively dividing the salad. Carney’s oysters seem to have been forgotten.
What was it like to be a foreigner catapulted into Britain’s establishment? It is not acquitting itself too well, I say. “I came to Britain five years after the global financial crisis started. When I went round the country there was a palpable sense of anger about what had happened, how the masters of the universe had blown up the economy and people were living with the consequences,” he says. “We had this period where for 10 years average real wages hadn’t been increasing and the last time that happened was when Marx was writing The Communist Manifesto. Now we’ve just tacked on another decade of stagnation. People aren’t running the numbers. But they feel it.”
As a frequent attendee of the Davos World Economic Forum and a Goldman Sachs alumnus, Carney was already part of the global elite. I want to know more about what he made of its UK branch after he moved to the BoE. Carney, who is taking his wine in calibrated sips, is now tackling his omelette with gusto. My Atlantic cod has also arrived. We are competing rather than co-operating over the french fries. “It is one or two degrees of separation at most,” he says. “There are certain people who know everybody. But I think it’s politically more upwardly mobile than before — look at today’s cabinet.” He lists examples of where institutions are well led — the Church of England, the NHS, the military. “Things aren’t going that well right now but I wouldn’t necessarily blame the ‘establishment’.”
Whoever deserves the blame, is he ready to declare Brexit a mistake? I sense a stiffening as Carney weighs his response. He points out that a referendum is a poor tool in a parliamentary democracy. People vote on a simple question with seven or eight motivations in mind. “Ultimately these questions turn into questions of identity,” he says. Prior to the Brexit campaign, Europe “was not even on the top seven or eight of most voters’ concerns” — these were dominated by the NHS, the economy and sometimes immigration. “Then overnight ‘taking back control’ from Europe becomes part of your identity.”
Weren’t economic promises made by the Leave campaign that have not been kept? Carney’s drawbridge opens a crack: “Put it this way, in 2016 the British economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent. And that calculation was made before today.”
Mark Carney also kept interest rates at historic lows whilst the price of property kept increasing far beyond any sustainable level compared to wage growth. He’s just as much part of the increase in inequality that’s ballooned since 2008.
Is it? The Tories went ahead with austerity back in 2008, despite everyone saying it was a bad idea and would affect our recovery. They went ahead with Brexit, despite it being made very clear that any deal other than what we had now would make us worse off to some extent. Why is it surprising that they have once again chosen to make the working person worse off at the expense of a handful of rich people? It is their only real plan for the last twelve years, even the pandemic gave them a bonus inequality booster that they could not have dreamed of.
“At the end of my governorship, we were finally enjoying positive real income growth.”
Below a graph that shows real income flatlined under his tenure.
4 comments
https://archive.ph/BK0Qq
Mark Carney and I have been going back and forth for months to pin down a date — each of us having to cancel at least once. Fate was guiding us. The former governor of the Bank of England strolls into our New York venue at roughly the moment London’s markets are closing after the most brutal day in decades for the British pound and UK gilts.
It is Friday September 23 and sterling has been dropping precipitously since Kwasi Kwarteng, Britain’s then chancellor of the exchequer, unveiled a package of tax cuts funded by public borrowing. The previous day Andrew Bailey, Carney’s successor at the BoE, had raised interest rates by half a percentage point. Given the inflationary implications of Kwarteng’s “mini” Budget, that already seems too little. According to someone on Twitter, which I had been scrolling through as I waited for Carney, London forex traders have redubbed the pound “shitcoin” (a little over a week later, Liz Truss, the new prime minister, made a partial U-turn and the pound regained ground but her credibility may never do so).
In a deep blue suit and a plain dark tie, Carney greets me with a rueful smile. The Canadian-turned-British bigwig, now based back in Ottawa from where he was recruited, looks younger than his 57 years. “We certainly picked our day,” Carney says. “Are you paid in pounds or dollars?”
As Canada’s central bank governor during the 2008 global financial crisis, then Britain’s throughout Brexit, Carney is a veteran of crisis management. Truss’s theory, rubbished by most economists, is that lower taxes would kick Britain into higher growth and overcome its low-growth malaise. But as we approach the next moment of truth on her fiscal plans, markets remain deeply unsettled. UK government bonds came under pressure again this week before rallying amid speculation that Truss would change course; on Friday, she duly dismissed Kwarteng and reversed the planned cut to corporation tax.
When we meet, Carney makes the very different case that governments should bet on “solidarity” by cushioning people from shocks and investing in them. “If you’re sentient, you know what the last 12 years have taught us, particularly since Covid, is that it’s good to have some social support,” Carney says. “At the end of my governorship, we were finally enjoying positive real income growth. Following Covid and inflation, British average wages will probably not now get back to pre-2008 levels until 2025 at least. That’s two lost decades.”
Not a good moment to announce tax cuts, then? “What happened today — doubling down on inequality at a time of belt-tightening — was a surprising set of choices,” Carney says. A few days after our lunch, David Frost, Britain’s former Brexit negotiator and a Truss ally, describes Carney, along with the FT, former prime minister Gordon Brown and others, as part of the “international hectoring class”.
Though we are meeting in Tribeca, the heart of lower Manhattan, America’s week has been dominated by news from Britain. It began with Queen Elizabeth’s funeral at Westminster Abbey and is now closing with the humbling of the currency that bore her image for 70 years. Carney met the Queen several times during his time as BoE governor. While listening to BBC Radio 4 early one morning, he picked up stray trivia about aphids, the sap-sucking insects that plague Britain’s crops from time to time. Later that day Carney was introduced to the Queen at a palace garden event. She said something about troubles with her garden that year. “I reeled off several facts about aphids, which captured her attention,” Carney says. On another occasion, after Carney had given a speech on climate change, Prince Philip said: “I never knew you were a greenie,” to which Carney replied, “Just like your son sir.”
We are seated inside the Odeon restaurant, a bustling French bistro. Carney, whom I first met in London in the 1990s, moved with Goldman Sachs to New York later that decade. His loft apartment was round the corner: “Being here brings some nostalgia,” he says. This restaurant can also tell you the tale of the past 40 years, Carney says. It was opened in the shadow of the Twin Towers in the 1980s, when “greed is good” Wall Street culture was taking off. Robbed of the Twin Towers in the 9/11 terrorist attacks, the restaurant’s exterior is now fronted by Perspex-enclosed dining boxes — a feature of Covid-19. “September 11 and the pandemic were two big solidarity-inducing events,” he says. Solidarity is clearly the message Carney wants to send — both as policy advice to governments and as a feature of social-impact investing.
Twelve years as a central bank governor — five as Canada’s, seven as Britain’s, putting him in the unique category of having run monetary policy for two G7 countries — have given Carney’s language a protective layer. The past few hours have been too kinetic for abstractions. My goal is clear, as is the waiter’s, who has now returned three times to ask if we have decided.
“I guess we can’t do two things at once,” says Carney apologetically. For starters, he picks oysters. I choose a green salad. Since I’m being virtuous, Carney proposes that he take french fries over salad with the fines herbes omelette he wants for his entrée. He asks for extra tomatoes — pronounced with the short British “a”, I notice. “I’m just trying to make you feel comfortable,” Carney says. I’d feel even better if you have a glass of wine, I reply. “That seems like a fair exchange.” Carney goes for Pinot Grigio. I pick Sauvignon Blanc. “This is a perfect example of solidarity — co-
operative ordering,” says Carney with a smile.
Has he seen the comment by Lawrence Summers, the former US Treasury secretary, who labelled Britain a “submerging market”? He pauses: “It’s a challenging position without question, it’s an unorthodox strategy the government is pursuing at this point in time.”
In 2016, Britain’s economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent. And that’s before today
Come on, I say, today’s move was fiscally reckless and political suicide. “‘Submerging’ is a bit strong,” he replies. “Look, we could spend 20 minutes listing all the strengths of Britain. All the liabilities are in the local currency and all the assets are in foreign, which are natural hedges and that is not the case in any emerging market. The institutional structures are there. We just had a reminder with the passing of the head of state.”
Minus the Queen’s death, couldn’t you reel off the same attributes of Britain in 1976, when it was forced to seek an IMF bailout? “The UK’s institutions were more sclerotic in 1976,” he says. “There was a reason for some of Margaret Thatcher’s reforms. The labour market today is more robust and the Bank is operationally independent.”
Should I convert my savings (such as they are) from dollars into pounds? “I don’t give investment advice,” Carney says with an apologetic shrug. I decide to leave the pound to one side. We are co-operatively dividing the salad. Carney’s oysters seem to have been forgotten.
What was it like to be a foreigner catapulted into Britain’s establishment? It is not acquitting itself too well, I say. “I came to Britain five years after the global financial crisis started. When I went round the country there was a palpable sense of anger about what had happened, how the masters of the universe had blown up the economy and people were living with the consequences,” he says. “We had this period where for 10 years average real wages hadn’t been increasing and the last time that happened was when Marx was writing The Communist Manifesto. Now we’ve just tacked on another decade of stagnation. People aren’t running the numbers. But they feel it.”
As a frequent attendee of the Davos World Economic Forum and a Goldman Sachs alumnus, Carney was already part of the global elite. I want to know more about what he made of its UK branch after he moved to the BoE. Carney, who is taking his wine in calibrated sips, is now tackling his omelette with gusto. My Atlantic cod has also arrived. We are competing rather than co-operating over the french fries. “It is one or two degrees of separation at most,” he says. “There are certain people who know everybody. But I think it’s politically more upwardly mobile than before — look at today’s cabinet.” He lists examples of where institutions are well led — the Church of England, the NHS, the military. “Things aren’t going that well right now but I wouldn’t necessarily blame the ‘establishment’.”
Whoever deserves the blame, is he ready to declare Brexit a mistake? I sense a stiffening as Carney weighs his response. He points out that a referendum is a poor tool in a parliamentary democracy. People vote on a simple question with seven or eight motivations in mind. “Ultimately these questions turn into questions of identity,” he says. Prior to the Brexit campaign, Europe “was not even on the top seven or eight of most voters’ concerns” — these were dominated by the NHS, the economy and sometimes immigration. “Then overnight ‘taking back control’ from Europe becomes part of your identity.”
Weren’t economic promises made by the Leave campaign that have not been kept? Carney’s drawbridge opens a crack: “Put it this way, in 2016 the British economy was 90 per cent the size of Germany’s. Now it is less than 70 per cent. And that calculation was made before today.”
Reddit Character Limit reached, continued at https://archive.ph/BK0Qq
Mark Carney also kept interest rates at historic lows whilst the price of property kept increasing far beyond any sustainable level compared to wage growth. He’s just as much part of the increase in inequality that’s ballooned since 2008.
Is it? The Tories went ahead with austerity back in 2008, despite everyone saying it was a bad idea and would affect our recovery. They went ahead with Brexit, despite it being made very clear that any deal other than what we had now would make us worse off to some extent. Why is it surprising that they have once again chosen to make the working person worse off at the expense of a handful of rich people? It is their only real plan for the last twelve years, even the pandemic gave them a bonus inequality booster that they could not have dreamed of.
“At the end of my governorship, we were finally enjoying positive real income growth.”
Below a graph that shows real income flatlined under his tenure.