In the hours after Britain voted to leave the European Union, there was a hole where political command should have been. David Cameron quit as prime minister. His plausible successors weighed their options in the dark. Victorious Eurosceptics premiered the blank expressions they have since honed. George Osborne went quiet as chancellor of the exchequer. Even the country's European commissioner prepared his resignation.
Into this eerie void, equipped with a lectern and baritone that suggested Morgan Freeman as the soothing US president in a disaster movie, Mark Carney appeared. The governor of the Bank of England made £250 billion of funding available to financial institutions as they adjusted to "today's events". It takes some craft to play down a shock while making handsome provisions for it.
National stabilisation
When Eurosceptics accuse Carney of dabbling in politics, they have a point: he did the immediate work of national stabilisation that politicians are meant to have the gumption to do themselves. His reward is public criticism from the likes of Daniel Hannan and Michael Gove, romantic Tories who might lack the governor's technical grounding in economics but always stand ready to calm the markets with a tendentious line of verse or half-understood quote from the blurb to The Road to Serfdom.
If the Bank of England’s expectations for growth in the first quarter after a Leave vote were wrong (unlike its view that sterling would fall, “perhaps sharply”), that owes something to its own work. Carney spent his summer fighting a fire lit by others. Gove reneged on a friend’s leadership campaign to mount a derisory effort himself. Everyone serves the country in their own way.
The grim thing about Carney’s treatment is not its potential to make him quit in exasperation. He has agreed to stay on until 2019, which amounts to an orderly exit. No, the worry is in the promise of things to come. Carney is the Patient Zero of Eurosceptic vilification: the first victim of a winner’s justice that will spread to others in public life who were unhelpful during the referendum campaign or might serve as handy repositories for blame if things go wrong.
Fear for Philip Hammond, to name one. The more the chancellor is seen to quibble with a brute departure from the single market, the more hostile will be the headlines that come his way. The less he entertains the fiscal loosening that was implicitly offered by the Leave campaign, the harsher the anonymous briefings he will have to endure.
Every chancellor has to resist representations from colleagues for extra money, like a lottery winner fielding charity cases, but there is more at stake now. The credibility of EU exit as a materially enriching course of action rests on events such as his autumn statement on November 23rd. If only we had a Leaver in the treasury, they will say, when public services are not flush after all. If only we had someone digging for victory.
Forces of hell
Only one other chancellor since 1997 has lacked a bellicose nature and advisers who could street-brawl if they had to: Alistair Darling, who was set upon by his own government's "forces of hell" for saying that the 2008 recession might be quite bad. Hammond should reflect on his experience and tool up.
And fear also for businesses, especially foreign ones, that raise retail prices in the next year or two to offset sterling’s depreciation. Carney is Canadian, remember, and therefore not really foreign in the eyes of that sect of the right that believes the Anglosphere is an actual thing. This did not save him from their insinuations.
Imagine a German discount supermarket such as Aldi or Lidl marking up basic goods. You can script the campaign against them now. It only takes a few targeted screeds against specific companies to instil a wider atmosphere of apprehension.
If you think ministers will speak up for these companies out of free-market principle, you have a very sweet nature. In 2012, newspapers hounded Stephen Hester, a bank executive, to give up a bonus for clearing bad assets built up by others. A less instinctively populist government than this one let him twist. In 2013, a proposed freeze on retail energy bills, despite rising wholesale costs, was the political sensation of the year.
No one should feel sorry for Carney. He lives in London on a big public salary and came here knowing the vehemence of our political culture. But others should read his treatment as a promissory note of future menaces.
Some (not all) Leavers see fifth columns everywhere and thirst to smash them down. Their paranoia suggests they do not know they are the powers in the land now. Their efforts to intimidate suggest they know too well. – (Copyright The Financial Times Limited 2016)