Carney charms MPs (once they get over his pay)

The next BoE governor reveals his plans for expectation management, but stays firmly conventional.

Against a background of the Bank of England's monetary policy committee deciding to keep interest rates flat at 0.5 per cent for another month — meaning it has now been four full years since the last rate change — the next governor of then Bank of England, Mark Carney, appeared before the Treasury select committee and and gave some of the first hints as to how he plans to run the country's central bank.

Of course, before he could do that, he had to justify his pay to the assembled MPs. Admittedly, Carney will be payed a lot: £480,000 a year base salary, plus a £250,000 "housing allowance", well above his predecessor Mervyn King's £305,000. But he defended his salary by pointing out that "I'm moving from one of the least expensive capital cities in the world – Ottawa – to one of the most expensive capital cities in the world," and by noting that his pay was in line with the outgoing head of the FSA, whose responsibilities are being merged with the Bank of England's.

David Ruffley MP was behind him, at least:

On the question of pay, you will be paid considerably less than recent England football managers and I think you are likely to have more success than them.

Eventually, Carney was allowed to talk about monetary policy, and revealed that, while he isn't going to be the loose-cannon central banker of our dreams — NGDP targeting and helicopter drops are out of the question — he does plan to be somewhat more aggressive than King.

In Canada, where Carney was the head of the central bank before his appointment here, there are formal reviews of the inflation target on a five-yearly timeframe. Here, by contrast, the target is — and has been since it was introduced fifteen years ago — for inflation to be within a one percentage point band of two per cent annually. MPs asked whether that target should be changed or loosened, and, while Carney did not directly offer any alternatives, he did argue that there should be that debate, albeit a "short" one.

The "high bar" that Carney thinks needs to be met before change can happen means that NGDP targeting — the idea of mandating the Bank to aim for a particular level of nominal (un-adjusted for inflation) GDP — is unlikely. He remains "far from convinced" that it could work. Similarly, while the USA has a dual mandate, requiring the Fed to target both inflation and unemployment, Carney isn't necessarily aiming for that as an end-stage for Britain either. He starts "from a position of considerable monetary stimulus to take up the slack", but believes that, for the time being, there is enough flexibility under the normal target to pull that off.

Where Carney marked the most substantial break with King was in his expressed belief that communication could be used more effectively to achieve the aims of the bank.

A huge part of monetary policy is expectations management — ensuring that people believe that the future economy is going to be certain way, and act on that belief. That's because many economic prophecies are self-fulfilling. If you tell everyone the stock market will crash, and have enough credibility that they act on it, then they will pull money out of the market and cause that very crash.

As a result, there's a huge difference between a central bank having a plan to keep interest rates low for a further two years, and a central bank saying it has a plan to keep interest rates low for a further two years. Carney understands that difference, and apparently plans to make the most of it.

No matter what happens, though, he has reiterated that he is only going to stay in charge for one five-year term, due to family commitments and a desire to get out of the high stakes world of central banking while he still can. While MPs expressed disbelief that someone could let something so prosaic as a family affect their job, Carney explained that he hoped to achieve all his goals in that span, and to make an exit "that is less newsworthy than my entrance".

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Don't blame Brexit on working-class anger - it's more worrying than that

White voters who identified as "English not British" backed Brexit.

For those of us who believe that the referendum result in favour of Brexit is an unmitigated disaster, the nominations for culprits are open. Former Liberal Democrat leader Nick Clegg made a compelling argument in the Financial Times that the blame lies squarely with Cameron and Osborne.

Clegg, who has first-hand experience of Tory duplicity, is scarcely a neutral observer. But that does not make him wrong. No doubt the PM and the Chancellor are the proximate cause, and should be held accountable by their parliamentary constituents, their party, and by the country as a whole - or what’s left of it if Scotland goes its own way.

Yet journalists and historians alike would do well to probe deeper causes of the referendum result. One obvious culprit is the British press, who, at best, failed to scrutinise the Leave Campaign’s claims and at worst actively abetted them. The New York Times has suggested that using the EU as a punching bag has helped sell papers (or at least generate clicks) in what is probably the most challenging climate for traditional journalism in two centuries.  Boris Johnson, it seems, is irresistible clickbait for the fourth estate. And as Nick Cohen has observed on Saturday, Johnson and Gove, both politician-journalists, have elevated mendacity in politics from an occasional vice to a lifestyle choice.

The search for deeper causes of the Brexit vote, however, cannot end with the press. A different electorate could have taken a different view, as they did in Scotland, which voted 2-1 to Remain.  What was the magic sauce?

Too many commentators, especially those on the Left, have blamed working-class anger. It’s all about social class, apparently. Lisa Mckenzie nearly predicted the result on that basis. Others use it simply to criticise Tory austerity politics. Blaming class can be woven into another favourite narrative - this is about lack of educational attainment. Anyone who has lived in Britain for any period of time knows the class system, the town-and-country divide, and intergenerational wealth disparities as important features of British life. 

Another favourite culprit is racism, as the Washington Post wondered on SaturdayOthers had the same thought, and racist attacks are on the rise. Given Nigel Farage’s antics in the weeks before the election, none of this is surprising. Amidst such scary stuff, many have tried to emphasise that most Brexit voters are not racist, but rather disillusioned with the rule of metropolitan elites. Douglas Carswell is one proponent of this argument, but he’s not alone. The Economist, in an effort to avoid talking about race, asserts that this result was about age, region and class.

Still, this kind of analysis is at best naïve and at worst disingenuous. 

As Lord Ashcroft’s polls suggest, it is only the white working class (if by this we mean C2/DE, though many in DE are unemployed) who voted for Brexit. In fact, those describing themselves as "in employment" generally voted to Remain. Those describing themselves as Asian, black or Muslims overwhelmingly voted Remain. By contrast, nearly six in ten white Protestants voted to leave. 

Brexit was a rejection of British multiculturalism. That is the real take-home message of the Ashcroft polls. Of those who see themselves as "English not British", 80 per cent voted to Leave, irrespective of social class. Those who see themselves as "British not English" voted 60 per cent for Remain. Similar patterns (and similar press involvement) can be found in the Quebec referendum of 1995, which failed by a narrower margin than Brexit succeeded.

Of non-Francophone voters in Quebec, 95 per cent voted to remain in Canada. Those who voted to leave, on the other hand, were rejecting Canadian multiculturalism. Quebecois separatism was seen as part of a struggle for cultural survival.  

Whether or not you call those attitudes racist, the advent of white English (and Welsh) nationalism is, for those of us who have taught modern European history, the truly ominous consequence of Brexit. Do not be fooled by the alternatives.

Dr D’Maris Coffman is a Senior Lecturer in Economics of the Built Environment at UCL Bartlett. Before coming to UCL in 2014, she was a Fellow and Director of Studies in History at Newnham College and a holder of a Leverhulme Early Career Fellowship in the Cambridge History Faculty.