Andrew Bailey Is the Perfect Choice for Brexiters

(Bloomberg Opinion) -- The suspense is over. After a seemingly endless carousel of candidates mulled over in the media, the next Bank of England governor will be the longstanding favorite Andrew Bailey. Seen as the ultimate safe pair of hands and respected across government and the City of London, he was always the logical choice — if not necessarily the most exciting.

His background in regulation will be critical as the U.K. forges its post-Brexit financial trading relationship with the European Union and the rest of the world. And for those who see the split from Europe as an opportunity for the City, rather than a disaster, his appointment will no doubt be a comfort. 

“I do think that, left to our own devices, the U.K., with its common law system and large, global financial markets, would construct financial conduct regulation in a rather different way,” he said back in April. No wonder Prime Minister Boris Johnson preferred him to the Brexit-dubious Minouche Shafik.

Even though Bailey was deputy governor at the BOE for three years to 2016, he didn’t sit on the rate-setting Monetary Policy Committee, so his monetary stance is more or less unknown. But there are nine people on the MPC, so that’s not necessarily an impediment. Johnson’s new government is no doubt keen to avoid the superstar central banker guise adopted by the current governor Mark Carney, who has regularly infuriated Conservative politicians over his positions on Brexit. The job will suit an anonymous soccer-style referee, who knows the rules but only makes his presence felt when necessary.

Bailey’s resume has focused primarily on the regulatory aspects of the BOE remit, especially in his current role as head of the Financial Conduct Authority; he has also headed up the bank supervisor, the Prudential Regulation Authority. At the FCA, he sensibly reined in some of the more draconian measures that were hurting Britain’s finance sector.

With Brexit at the forefront of the government’s agenda, it makes eminent sense to have your most experienced rule-setter in charge to steer the City through a painful divorce. Maybe he’ll help make it a place that can survive and thrive outside the EU.

Of course, his long career at the main regulatory bodies means he doesn’t come without fleas, as my colleague Mark Gilbert argued in June. The FCA’s role in the chain of events that led to Neil Woodford freezing redemptions from his flagship fund has been questioned. The government has clearly decided that his neutrality on Brexit and his tendency to not over-regulate are more important. He did stabilize the FCA after a rocky period too.

Securing London’s preeminence as a financial services hub in a post-Brexit world is the top priority in what has become a much bigger job than just presiding over interest-rate setting. The British economy is sluggish but Carney has left a full toolkit to handle pretty much all eventualities. Bailey is a continuity candidate for the Bank, but one who’s placed to handle the discontinuity of Brexit.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.

©2019 Bloomberg L.P.

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