The Governor of the Bank of England, Andrew Bailey, is a loyal and well-intentioned public servant in a role that, by its nature, attracts constant blame and hindsight judgment. Liz Truss is a spectacularly failed 44-day prime minister with a book to sell.
So when Truss says Bailey should have been sacked for his part in her downfall –when the Bank intervened to prevent a pension fund crisis after her chancellor Kwasi Kwarteng’s radical mini-Budget of September 2022 – and that he should be sacked anyway for being part of a Keynesian economic Establishment, with the Treasury and the Office for Budget Responsibility, that has delivered nothing but stagnation, my instinct is to stand up for Bailey.
But just for a moment, just as an intellectual exercise, let’s take the publicity-seeking Truss seriously and examine the case for the prosecution. Long before the mini-Budget fiasco, I described Bailey as a highly competent middle manager whose ‘misfortune’ was to have been promoted to the governorship. Other observers, reviewing his record as head of the Financial Conduct Authority between 2016 and 2020, disputed ‘highly competent’. Since then, nothing about the Bank’s market signalling and management of interest rates to combat the 11 per cent inflation spike it plainly failed to predict has boosted confidence in the Governor or his institution, even if the rate-hike medicine has eventually worked.
Central bankers are most effective when markets imbue them with mystical authority, as they did in recent times with Alan Greenspan at the US Federal Reserve and, for a while, Mario Draghi at the European Central Bank. The uncharismatic Bailey has never come close.
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