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When Mark Carney decided four years ago this month to swap the helm of Canada’s central bank for that of the U.K., he said he was “going to where the challenges are greatest.”

Back then the task at hand for the next Bank of England governor was to spark up a sluggish economic recovery with interest rates already near zero. Now the challenges are even greater, with the U.K. preparing for withdrawal from the European Union.

The pound is sliding and there is a whiff of stagflation in the air, even as the economy performs better than the BOE predicted. Monetary policy is more stretched than ever and banks are threatening to cut jobs in the City of London. Carney is also under attack from some politicians who accuse him of bias over Brexit and of misreading the danger to the post-referendum economy.

Against that backdrop Carney must decide – perhaps as soon as this week and certainly by the end of the year – if he’s up for these bigger challenges. He can either wrap up his term in London as originally planned in 2018, when Brexit negotiations will be fully underway, or extend it to 2021. The Financial Times, citing friends, reported overnight that he is leaning towards the latter.

Carney is signaling that the choice will ultimately be down to the personal rather than the political. He told lawmakers last week:

“Like everyone, I have personal circumstances which I have to manage… This is a role that requires total attention, devotion and I intend to give it for as long as I can.”

In the meantime he must keep setting monetary policy. Just weeks ago, economists surveyed by Bloomberg predicted a November rate cut. After the economy grew 0.5 percent in the third quarter and Carney noted limits to officials’ willingness to ignore accelerating inflation, they now see no change .

On the Markets

One barometer of how investors view Carney is the pound, which rose slightly against the dollar in Asian trading after the FT story.

“Mark Carney has done an exemplary job since June 23,” said Simon Derrick, a strategist at BNY Mellon. “Irrespective of why he might leave, losing him would add yet more uncertainty at exactly the wrong point.”

Meanwhile, central bank policy may mean U.K. gilts remain the world’s worst performing sovereign-debt market of the past three months. 

Manufacturing Strategy Takes Shape

Days after Nissan said it would keep investing in post-Brexit Britain, the government is fleshing out the details, and providing insight into its strategy for shielding manufacturers from the Brexit fallout.

Business Secretary Greg Clark yesterday said he told the Japanese automaker that May’s government would seek to maintain tariff-free access to the EU once the U.K. has left the bloc. That contradicts warnings against “cherry-picking” access to the single market, though it may be possible in the case of cars, as German manufacturers would still like easy access to Britain’s drivers.  

Clark also said in a BBC interview that promises were made to support training and innovation; to keep on regenerating sites to bring suppliers back; to be at the leading edge of research and development; and to pursue a strategy to keep U.K. industry competitive.

“My determination was to go all-out to provide the confidence that a long-term investor needs that Britain will be the go-to place for manufacturing cars,” Clark said.

Inspired by Nissan’s success, other industries will now likely intensify their lobbying: Banks want to keep so-called “passporting rights,” while pharmaceutical giants are keen for more foreign talent and a constant stream of funding. GlaxoSmithKline and AstraZeneca executives are already planning to meet ministers, according to the Sunday Times.

“Theresa May is digging herself deeper into a hole by promising help to Nissan,” Erik Nielsen, chief economist at UniCredit said in a report on Sunday.

Brexit Bullets

  • U.K. banks may gain £12 billion yearly by leaving EU, says pro-Brexit lobby
  • U.K. can secure trade deals twice amount of those of EU, says Change Britain group
  • Ernst & Young says 20 companies made Brexit-related warnings in second quarter
  • EU’s Juncker says no link between Canada trade deal and Brexit
  • Brexit may lead to complex bank structures, FCA’s Bailey tells Times
  • Lloyds says business confidence rose 13 points to post-referendum high of 37 percent…
  • …But Grant Thornton says U.K. business optimism is down 19 percentage points
  • Brexit and a possible EU breakup seen as the biggest investment threat in a survey of 83 money managers
  • Iceland vote demonstrates growth and jobs beat populist parties

And Finally…

London property is defying those who warned a vote for Brexit would cause a quick slump. Real estate in the U.K. capital may end up cheaper next year, but so far the correction has yet to really begin, according to a Bloomberg analysis of data from the U.K. Land Registry. Prices may be falling in prime central areas, but across the city they’re standing firm.

You can explore the capital’s housing market through our interactive map.

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