Mark Carney will stay on as Bank of England Governor until January 2020, Chancellor Philip Hammond has confirmed.
The move means extending Mr Carney’s term by seven months, having previously planned to step down in June 2019.
Mr Hammond told the Commons on Tuesday: “I can now announce to the House that I have been discussing with the Governor his ability to be able to serve a little longer in post in order to ensure continuity through what could be quite a turbulent period for our economy in the early summer of 2019.
“I can tell the House today that the Governor has agreed, despite various personal pressures to conclude his term in June, that he will continue until the end of January 2020 in order to help support continuity in our economy during this period.”
The Canadian announced in late 2016 that he would stay in his role until the end of June 2019, opting against a full eight-year term.
It would have left him in the hot seat for just three months after Britain formally leaves the European Union in March, leaving a newcomer to navigate the aftermath of the divorce.
It is thought the increasing fears of a no-deal scenario also increased the need for continuity at the top of the Bank.
However, Mr Carney confirmed last week that he was in talks with the Treasury over extending his tenure, saying he pledged to do “whatever he can to support the UK through Brexit”.
In an exchange of letters with Mr Hammond published on Tuesday alongside the announcement, Mr Carney said: “I recognise that during this critical period, it is important that everyone does everything they can to support a smooth and successful Brexit.
“Accordingly, I am willing to do whatever I can in order to promote both a successful Brexit and an effective transition at the Bank of England, and I can confirm that I would be honoured to extend my term to January 2020.”
Shadow chancellor John McDonnell welcomed the move, saying: “I have a good working relationship with Mark Carney. We meet on a regular basis and I have a lot of confidence in him.
“So, I’m pleased this will give us a bit of stability.”
But the decision to keep Mr Carney on board has drawn criticism from the likes of Andrew Sentance, who is a former member of the Bank’s interest rate setting Monetary Policy Committee (MPC)
“Totally contrary to the spirit and letter of 2012 Bank of England Act. A shocking abuse of procedure which totally undermines the concept of BoE independence,” Mr Sentance said on Twitter.
Treasury Select Committee chairman Nicky Morgan welcomed the term extension, saying it offers more time to find a qualified replacement for Mr Carney.
“This announcement provides much-needed stability and clarity during this important period,” she said.
“The Government should now use the extra seven months to continue its succession planning.
“It should identify a candidate in good time for the Treasury Committee to scrutinise the appointment.”
Mr Carney became the Bank’s Governor in 2013, succeeding Mervyn King and becoming the first non-Briton to hold the post.
He previously served as governor of the Bank of Canada from 2008 and was widely credited with helping the Canadian economy withstand the shock of the financial crisis.
It followed a stint in the Canadian government, having been senior associate deputy minister of finance, all of which came after a 13-year career with Goldman Sachs.