The next Governor

When Sir Mervyn King steps down as Bank of England Governor next June, even his most loyal supporters will struggle to describe his tenure as a success. He failed to spot the massive asset bubble which burst so spectacularly. His job was to keep inflation down, and Britain has instead suffered the worst inflation in Europe. He has injected £375 billion of digitally created money into the economy, to no apparent benefit whatsoever. The Governor has many qualities: he is learned, amiable and resolute. But he has not proven to be much good at running a central bank.

The hunt for his successor will begin in the autumn, when the Chancellor will advertise for the job. It will be the most important vacancy in Britain. The job may be tough, but it comes with several perks. There are men in pink tailcoats and top hats to bring you coffee, bright staff, a cunningly inflation-proofed pension, a salary of around £400,000 a year, with the possibility of lots more once you retire. There is also now the security of an eight-year term of office, a blessing in this job-hopping economy.

So far, however, there is an alarming absence of good contenders. Paul Tucker, one of the Bank’s deputy governors, was a front-runner until he was drawn into the Libor fixing scandal. The bookmakers have a list of a dozen likely candidates, and to read it is to fear for our country’s financial future. The hour has come, but not the man.

It is astonishing that Gus O’Donnell, who ran the civil service under the Labour government, is now the bookmakers’ favourite to succeed Sir Mervyn. He is the British equivalent of a European-style technocrat and has had nothing sensible to say about either the economic crisis or our failure to recover from it.