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Governor hails appointment of his successor

BANK of England Governor Sir Mervyn King has welcomed the appointment of Canadian central bank chief Mark Carney as his successor.

The appointment of Mr Carney was a surprise as the leading contenders were thought to be domestic candidates such as Bank deputy governor Paul Tucker; Lord Turner, chairman of the Financial Services Authority; and Sir John Vickers, chairman of the Independent Commission on Banking.

Sir Mervyn told MPs: "I think anyone who holds down a job like mine wants very much on the day when they leave, to hand the Bank on to someone who they know will carry on the good work, and I am confident with Mark Carney as someone with whom the Bank is in very good hands."

The challenge facing Mr Carney, the first non-Briton appointed to the post, was laid bare by Sir Mervyn, who told the Treasury Committee: "It may be unreasonable to expect anything other than a slow and protracted recovery, absent a further fall in the real exchange rate.

"In such an environment, there are limits to the ability of domestic policy to stimulate private sector demand as the economy adjusts to a new equilibrium."

Official figures published yesterday confirmed that the UK economy grew by 1% between July and September.

The new figures also showed the economy contracted by 0.1% compared with a year earlier. The previous estimate predicted flat growth.

Sir Mervyn admitted to the MPs that the central bank should probably have made clear earlier that a substantial recovery would not come in 2013 and 2014.

He said: "We have significantly lowered, in our view, the chances of growth being rapid.

"Now this is something which I think has been building up in our minds over the past year.

"We do not think the chances of very rapid growth in 2013 and 2014 are very great."

Paul Fisher, a member of the Bank's Monetary Policy Committee, said Britain's economy may require more monetary easing next year. Sir Mervyn denied the Bank was too deferential and hierarchical, a charge made in a recent review.

He said he regularly spoke to junior staff at Threadneedle Street.

However, Mr Fisher struck a slightly more conciliatory tone. He said: "I think what we have to address is why the staff have this perception.

"I think that could be because they don't see the whole of the process."

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