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New look for the Bank, but don't expect an end to the groupthink, says ALEX BRUMMER


As chief economist at the Paris-based Organisation for Economic Co-operation and Development (OECD), Clare Lombardelli is one of the few Brits to hold one of the high offices at a global policy institution.

So it is slightly curious that after just a year handing out advice to the OECD’s 38 members, generally considered the elite of Western capitalism, she has agreed to return to the UK as deputy governor of the Bank of England.

There will be much discussion of how, for the first time, the 11-person interest rate setting Monetary Policy Committee (MPC) now has a majority of women members and how good that is for diversity.

It may also be the case that the Treasury is seeking to put in place succession planning for when Andrew Bailey ends his term as Governor in March 2028.

The challenges will be considerable. Lombardelli will be responsible for implementing the recommendations of ex-US Federal Reserve chairman Ben Bernanke, called in by the Court, the Bank’s supervisory board, to mark a shoddy forecasting record.

Diversity: The Bank of England's 11-person interest rate setting Monetary Policy Committee now has a majority of women members

Diversity: The Bank of England’s 11-person interest rate setting Monetary Policy Committee now has a majority of women members 

If the authorities were looking for a diversity of views and an end to the perceived ‘groupthink’ on the MPC they could have been more imaginative.

Lombardelli served her apprenticeship on Threadneedle Street before holding several key roles in Whitehall, including principal private secretary to George Osborne when he was Chancellor.

She would not measure up to former Governor Mervyn King’s rigorous definition of what a senior Bank economist should be in that there is no Ph.D on her CV.

A lack of exposure to the commercial world might also be considered a lacuna.

Another MPC member, Catherine Mann, told an FT conference this week that the spending habits of wealthy Britons had made curbing inflation more difficult because they continue to splurge on travel, eating out and the like, irrespective of the monetary squeeze.

A trip to Gatwick or Stansted airports and the record bookings of Ryanair and Easyjet, where most travellers are ordinary middle-income citizens, might remind Mann that it is not just the wealthy who like to have a good time.

Squeezing the pips of consumption, at a moment when the resilience of the UK is being tested, does not seem the brightest of ideas as headline inflation heads towards the 2 per cent target.

Flying colours

Maybe then we should tut, tut at the 2023 annual results from British Airways owner IAG.

It reported operating profits of £3billion, more than double the previous year and above pre-Covid levels, driven by strong demand for leisure travel. 

How dare travellers in Britain and across Europe waste their resources on enjoying themselves!

BA remains the jewel in IAG’s crown, with its domination of transatlantic travel.

The surprise is that so many stick with BA and Heathrow, where just 60 per cent of flights departed or arrived on schedule last year.

As a passenger who suffered with BA delays of several hours twice last spring I know what that feels like. 

One goal in 2024, with bookings already strong for the first two quarters of the year, is to rebuild long-haul capacity for BA and Iberia.

Business travel has yet fully to pick up, providing an expansion opportunity. BA might want to reflect that the soaring cost of Club class might be an obstacle.

BA has long been an opponent of a third runway at Heathrow, fearing it would create more gates and capacity for rivals.

Recent word from Heathrow is that a third runway, regarded as the best option for growth by the Government, is off the table.

If Britain wants to make the most of its opportunities as a global centre for financial, business, creative and tech services, it needs to recognise that capacity constraints will hold it back.

Taking stock

Recent listed escapees have unnerved the London Stock Exchange.

It is easy to forget that under chief executive David Schwimmer it has become a financial data powerhouse.

A tie-up with Microsoft ought to bring the magic of AI to its data and analytics, although you have to be careful what you wish for with avaricious tech masters of the universe. 

A £1billion share buyback ought to ease investor collywobbles.



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