New Bank of England boss to swap Canada growth for UK stagnation

Tue Nov 27, 2012 11:49am EST
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By Nia Williams

LONDON (Reuters) - When Canadian Mark Carney becomes Bank of England chief next year, he won't only be swapping a vast, sparsely populated, resource-rich country for a small, crowded island on the edge of a European continent in crisis.

The outgoing Bank of Canada governor will leave behind an economy which weathered the global financial crisis quite well and is now achieving respectable growth, at least by Europe's dismal standards.

Carney, whose appointment to the British central bank was announced on Monday, will face new, and in some areas uncharted, problems in an economy that has only just got out of recession.

"He's going to be coming into the job at a very difficult time," said Howard Archer, chief UK and European Economist at IHS Global Insight. "The economic challenges are far deeper than those facing Canada."

Carney, who starts the new job next July, faces some sobering contrasts.

UK growth is forecast by the Organisation for Economic Cooperation and Development to be 0.9 percent next year, half that of Canada's at 1.8 percent.

Britain is struggling with a budget deficit equal to 8 percent of annual economic output, while Canada's is just 1.4 percent of GDP, and heading for balance by 2015 if the government gets its way.

Nearly half of British exports go to the euro zone, pinned in recession by its debt crisis. Around 75 percent of Canadian exports go to the United States, where demand is still weak but looks to be getting better.   Continued...

Bank of Canada Governor Mark Carney arrives at a news conference in Ottawa November 26, 2012. REUTERS/Chris Wattie