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

As chief economist at the Paris-based Organization for Economic Co-operation and Development (OECD), Clare Lombardelli is one of the few Britons to hold a senior position in a global policy institution.

It is therefore slightly curious that after just a year giving advice to the 38 members of the OECD, 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 debate about how, for the first time, the Monetary Policy Committee (MPC), made up of 11 interest rate-setters, now has a majority of female members and how good that is for diversity.

It may also be the case that Treasury is trying to implement a succession plan for when Andrew Bailey finishes his term as governor in March 2028.

The challenges will be considerable. Lombardelli will be responsible for implementing the recommendations of former US Federal Reserve Chairman Ben Bernanke, summoned by the Court, the Bank’s supervisory board, for a history of poor forecasts.

If the authorities had sought a diversity of views and an end to perceived “groupthink” in the MPC, they could have been more imaginative.

Lombardelli served his apprenticeship at Threadneedle Street before taking up several key positions in Whitehall, including principal private secretary to George Osborne when he was chancellor.

He would not live up to former governor Mervyn King’s rigorous definition of what a senior Bank economist should be, as there is no PhD on his CV.

Lack of exposure to the commercial world could also be considered a loophole.

Another MPC member, Catherine Mann, told a Financial Times 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, regardless of the monetary restriction.

A trip to Gatwick or Stansted airports and record bookings from Ryanair and Easyjet, where the majority of travelers are ordinary middle-income citizens, could remind Mann that it’s not just the rich who like to have a good time.

Squeezing the squeaks out of consumption, at a time when the UK’s resilience is being tested, does not seem like the brightest idea as headline inflation moves closer to the 2 per cent target.

flying colors

Perhaps then we should look at the 2023 annual results of British Airways owner IAG.

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

How dare travelers from Britain and all over Europe waste their resources having fun!

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

The surprise is that many are sticking with BA and Heathrow, where only 60 per cent of flights left or arrived on time last year.

As a passenger who suffered delays of several hours at BA twice last spring, I know what it feels like.

A goal for 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 not yet fully recovered, offering an opportunity for expansion. BA might want to reflect that the rising cost of Club class could be an obstacle.

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

The recent news from Heathrow is that a third runway, considered by the Government to be the best option for growth, is ruled out.

If Britain is to make the most of its opportunities as a global hub for financial, business, creative and technology services, it must recognize that capacity constraints will hold it back.

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