LONDON Oct 8 British finance minister Philip
Hammond has appointed HSBC's chief European economist,
Karen Ward, to advise him as the country prepares to leave the
European Union, the finance ministry said on Saturday.
Ward's new role as economic special advisor is an
influential backroom position in British politics at a time when
Hammond is considering how much to cushion the economic shock of
June's vote to leave the EU, and how far to protect Britain's
financial services sector in upcoming EU talks.
Previous people to hold a similar role include Ed Balls, who
advised former prime minister Gordon Brown when he was finance
minister, and went on to serve as a cabinet minister and then
ran unsuccessfully to lead the Labour Party in 2010.
Ward joined HSBC as an economist in 2006 not long after
leaving university, and first covered the British economy before
tackling global central banking themes and then becoming the
bank's chief European economist late last year.
In June she was the lead author of an HSBC report which said
Britain's vote to leave the EU would act as a "major drag" on
euro zone demand, as Britain was the destination for 13 percent
of euro zone exports.
"Potential disruption to supply chains and a general cloud
of uncertainty may also weigh on growth in trade, and in turn
business investment," the report said.
Hammond and other British ministers have said the EU has
much to lose economically if it pursues a tough line in Brexit
talks, though many economists have said Britain relies more on
EU markets than the EU depends on Britain.
Ward also co-authored a report for HSBC in mid-2014 which
argued that inflation in asset prices including housing was
"increasingly rampant" in parts of the world, and that
policymakers needed to stop bubbles developing.
The Bank of England has been at the forefront of so-called
macroprudential measures - such as loan-to-value limits on
mortgages - which the report said would allow central banks to
keep interest rates low while restraining asset price inflation.
Unlike changes in interest rates, many of these measures
needed regular government approval, the report said.
"This will further blur the distinction between central
banks and governments. So far as they ever could, central banks
can no longer ignore the wishes of their political masters,"
Ward wrote with HSBC's chief UK economist, Simon Wells.
British Prime Minister Theresa May made an unusually direct
comment about BoE policy on Wednesday when she said ultra-low
interest rates and quantitative easing had bad side-effects.
(Reporting by David Milliken; Editing by Stephen Powell)