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Lagarde Model Shunned as U.K. Extends Economy’s Male Millennium

Craig Stirling and Lucy Meakin

(Bloomberg) -- Just weeks after Christine Lagarde became the euro zone’s first female central bank chief, neighboring Britain has chosen to stick with what it’s only ever known for economic policy: men in charge.

This month’s decision to install Andrew Bailey as Bank of England governor, along with Sajid Javid’s reappointment as chancellor of the exchequer, extend an exclusively male grip on both those roles that has already notched up a combined history of more than 1,000 years.

That further stains an already poor record on diversity in Prime Minister Boris Johnson’s new government. Only seven members of his cabinet -- out of 23 -- are female. On economic policy, it’s worse: aside from the top roles, he didn’t appoint even one woman as a minister in the team of four now running the Treasury with Javid.

Bailey will become the 121st man to lead the BOE since its creation, meaning that by the time his term is finished, it will have had 333 years of male leadership. Javid’s role, first created in the 12th century, has never been filled by a woman.

The Treasury that Javid runs has also never had a female permanent secretary, as its top civil servant is known.

It’s hard to see how the situation at the BOE would change any time soon. Currently all four of the central bank’s deputy governors are men, and the only woman in the institution’s top management echelon is Joanna Place, the chief operating officer. There’s just one female on the nine-member rate-setting committee.

Serious Issue

“There is no woman deputy governor, which is crazy,” said Vicky Pryce, former joint head of the Government Economic Service. “Where will these women come from in the future if this generation now cannot get there? The pipeline is a serious issue. They’re going to have to start working on it now unless they decide to bring in someone from the outside next time.”

By contrast, far younger economic institutions abroad have embraced female leadership. Before the European Central Bank, Lagarde had been in charge of the International Monetary Fund after serving as the counterpart to Javid’s predecessors at the French finance ministry. The U.S. Federal Reserve was formerly led by Janet Yellen.

The hunt for a successor to BOE Governor Mark Carney began under Johnson’s predecessor as prime minister, Theresa May. She suggested to lawmakers that she would welcome a female central bank chief.

Members of the parliamentary committee that scrutinizes the Treasury and BOE last year also expressed concern about the absence of diversity in senior positions at the central bank. They said they could decide not to approve an appointment to any of the BOE’s policy boards if it felt insufficient effort had been made to find a more diverse candidate. That wouldn’t bind the Treasury to choose an alternative, but it could prove highly embarrassing.

Binders of Women

Javid, who was in charge of the BOE appointment, had women to choose from. Former BOE deputy governor Minouche Shafik, the director of the London School of Economics -- who also once served as a deputy to Lagarde at the IMF --and Santander U.K. Chair Shriti Vadera were believed to be potential candidates. Helena Morrissey, a fund manager, also put herself in the frame.

He also could have opted for a candidate with a more diverse employment history to lead a central bank that has often been accused of insularity and groupthink. The ultimate insider, Bailey served three decades at the BOE, culminating as deputy governor and chief executive of the Prudential Regulation Authority.

The chancellor himself is one example of Johnson breaking new ground, being the first-ever person to hold the role with a Muslim family background.

Javid does claim to care about diversity, emphasizing the matter when describing the new governor’s suitability for the job. Bailey is currently head of the Financial Conduct Authority.

“I would particularly highlight his proud record of increasing the diversity of the FCA’s senior leadership team,” Javid said. “Under his leadership, he is committed to making the bank a more open and diverse institution.”

To contact the reporters on this story: Craig Stirling in Frankfurt at cstirling1@bloomberg.net;Lucy Meakin in London at lmeakin1@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Brian Swint

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