From safe pair of hands to the government’s whipping boy, Andrew Bailey has certainly had a rollercoaster ride as governor of the Bank of England since he was appointed little more than two years ago.
Bailey was handed the keys to Threadneedle Street by Mark Carney just as the first Covid-19 wave was breaking over the global economy. Since then it has been one nasty shock after another for the man long-tipped for the Bank’s top job.
The lockdown in the spring of 2020 meant Bailey – born and raised in Leicester – spent a lonely first few months in the governor’s parlour, with all but a handful of the Bank’s staff working from home.
It was not long before he was accused of making missteps.
Bailey ditched his predecessor’s policy of giving “forward guidance” to the financial markets, only to be accused by investors of failing to lay out a framework for decision-making in a similar way to the US Federal Reserve and European Central Bank.
When inflation began to increase in late 2021, Bailey ran into further trouble. He said workers should restrain their pay demands to help bring down inflation. Unions were not the only critics of a message that appeared detached from the everyday concerns of low- and middle-income workers.
But it has been the aftermath of the pandemic that has heaped pressure on the 63-year-old. The Bank’s job is to hit the government’s target for inflation of 2%. That has proved increasingly difficult, first as a result of global supply bottlenecks and now as a result of rocketing energy prices caused by Russia’s invasion of Ukraine.
Bailey’s predecessor, Carney, had a reputation for being something of a martinet, not unlike Eddie George, governor when the Bank was granted independence by Labour after the 1997 election. Bailey, George’s bag carrier at the time, has a more consensual laid-back style.
He might even be a bit too laid back for his critics, who have accused Bailey of being asleep at the wheel as inflation reaches levels not seen in four decades and the economy heads for a five-quarter recession. A football manager presiding over similar results would be heading for the exit but Bailey, a West Bromwich Albion supporter, looks more secure.
He is not the first governor to run into problems with the government. Alistair Darling, chancellor during the global financial crisis, thought seriously about not reappointing Mervyn King for a second term.
But unlike King, Bailey is on a fixed eight-year term and intends to see it out. If Liz Truss or Rishi Sunak want to get rid of him they will have to take the highly risky step of firing him.
Even that seems possible at a time when so many senior Conservatives appear to attack political, judicial and financial institutions if they make life difficult for the government.
It is five and a half years since the Daily Mail ran the headline “Enemies of the people” to describe supreme court judges who agreed the government would need the consent of parliament to give notice of Brexit.
Iain Duncan Smith and Jacob Rees-Mogg joined in the judge baiting, accusing them of overreach. Both are expected to be in a Truss cabinet.
Truss was the justice secretary at the time and after much delay, she issued a statement reaffirming the independence of the judiciary.
Bailey must hope, should Truss become prime minister, she will be equally emollient when the bank’s independence is called into question.