The pound has not collapsed. You can still trade shares, bonds and currencies in the City of London. And inflation, while still high, at least doesn’t come with ‘hyper’ as a prefix, at least not yet. If the Governor of the Bank of England Andrew Bailey wants to celebrate today’s fifth anniversary of taking charge of the UK’s central bank he can at least reflect on a few modest achievements. The trouble is, they are very limited. In reality, Bailey has proved a poor if not catastrophic Governor – and everyone in the City knows it.
When Bailey took over, he was the antithesis of his predecessor. The globe-trotting Mark Carney, who this week added Prime Minister of Canada to his already impressive CV, was a ‘rock star central banker’ with a reputation for big, bold reforms, willing to take controversial stances on issues such as climate change and Brexit. Bailey by contrast is a low-key technician who has spent his entire career in financial regulation. He was seen as a safe, competent technocrat, a man who could manage monetary policy without Carney’s theatrics.
The trouble is, the record is not very good. If the main task of a central bank is to control inflation, then it has been a difficult five years. Inflation spiked all the way up to 11 per cent in 2022, one of the highest rates in the developed world, and although it has come down since then it remains above the 2 per cent target. The London stock market has been in steep decline, with the number of quoted companies falling from over 2,000 when Bailey took over to fewer than 1,700 now, and with the number of IPOs falling behind markets such as Oman and Malaysia. Many people quite rightly blame that on burdensome regulations that the Bank has done little to lighten. The LDI crisis that blew up during the unfortunate premiership of Liz Truss highlighted how poor the Bank has become at regulating the City. The conspiracy theories that Bailey was part of a Deep State plot to oust Truss are more than a little fanciful. But it didn’t help, and much of the right now has a deep distrust of the Bank. Meanwhile living standards have stagnated, and real wages have fallen. It is not the best track record.
Of course, it would be unfair to pin all the blame for that on Bailey. His predecessor printed far too much money, and it is not his fault that the crushing size of a dysfunctional British state, combined with wealth destroying net zero targets, have trapped the UK in a doom loop of rising taxes and zero growth. But Bailey has done nothing of significance to change the Bank, to reboot the City, or to educate the voters into making harder choices. Like much of the British establishment, he is a safe pair of hands, who can manage decline competently – and if that is what you are looking for, he has been perfectly good at.
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