The unreliable boyfriend commits, says Anna Stupnytska, global economist at fund manager Fidelity International.

Mark Carney’s re-appointment brings continuity to BoE policy. Compared to almost any potential successor, Carney will exert a more firmly dovish influence on UK monetary decision-making, as he has done consistently since he took the helm in 2013. While Carney expects a gradual pace of rate hikes from here, perhaps little more than one per year, as he sees out the rest of his tenure, in reality he will be driven by how smooth or disruptive Brexit turns out to be.

Indeed, it is perhaps with regards to Brexit where Carney-continuity is more important, and why Theresa May was so keen to keep him on board. In addition to setting interest rates, the Bank of England also supervises and regulates British banks through “macro-prudential” policy. As such, investors can take some comfort that Carney is as well-placed as anyone to navigate any choppy waters that Brexit will bring to threaten Britain’s overall financial system.

Regarding the process for the appointment of Carney’s successor, the chancellor wrote to the Bank of England governor:

An extension of your term would ensure there is continuity at the Bank during this exceptional period and would also allow for a new governor to be appointed during the autumn next year after the terms of the UK’s withdrawal and the framework for the future partnership have been finalised.

The seven-month extension of Carney’s term as Bank of England governor is shorter than some expected. He will stay on until the end of January 2020, which means he’ll be at the central bank’s helm during the withdrawal period (the UK is due to exit the EU at 11pm UK time on Friday 29 March, 2019). But he won’t be there for the entire transition period, which ends on 31 December 2020.

The shadow chancellor, John McDonnell, welcomed the news, our political correspondent Peter Walker reports. He told reporters after Treasury questions in the Commons:

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. I wish we’d have heard a bit sooner, but that’s good.

While refusing to say who he would prefer as a successor, McDonnell said he would like the new governor to be a woman:

It would be useful if it was, actually. It’s nice to get a better gender balance in these things.

Nigel Farage, vice chairman of the pro-Brexit group Leave Means Leave, has a different response.

Nicky Morgan, who chairs the influential Treasury select committee, is pleased.

This announcement provides much-needed stability and clarity during this important period. 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.

The announcement comes after weeks of speculation as to whether Carney, the former governor of Canada’s central bank, who took the Bank of England job in 2013, would agree to an extension of his term given the economic uncertainty over Brexit.

You can read our full story here

You can read the exchange of letters between Carney and Hammond here.

In his letter, the chancellor said:

Further to our discussions and those that I have had with the Prime Minister, I am writing to ask whether you would be able to extend your term as Governor of the Bank of England to January 2020 to support a smooth exit of the United Kingdom from the European Union and an effective transition to the next Governor.”

In his reply, the Bank of England governor 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.”

HM Treasury has also announced that Jon Cunliffe has been reappointed as Deputy Governor for Financial Stability for a second five-year term.

Bradley Fried, Chair of the Bank’s Court of Directors, said

The Bank and its Court of Directors are delighted that Mark and Jon have agreed to stay on. Continuity in the outstanding leadership they provide will help the Bank succeed in our crucial work.

The 10-year anniversary of the Lehman’s collapse has prompted photographer Andy Hall to take to the streets of the City of London to see what’s changed.

The City from the street, a decade after the crash – in pictures

Ten years ago this weekend US investment bank Lehman Brothers collapsed (the biggest corporate failure in history), causing panic on both sides of the Atlantic. A decade on, where are the key players in the financial crisis?

Here’s a bit more on the US banks’ Brexit plans from Lisa O’Carroll, who has been watching the Treasury select committee hearing with bank bosses from Barclays, Citi and JPMorgan this morning.

JPMorgan’s vice chair said his forecast of “modest” job losses of 150 to 200 between now and Brexit Day was not inconsistent with comments by the bank’s chairman Jamie Dimon that Brexit could impact 4,000 jobs.

The numbers I mentioned are to do with the short term horizon to get us through to March and then what we call Day 2.

We just don’t know what is going to happen in the future.

The evolution of our staff count will be very much a function of the ultimate deal that can be secured by the UK.

There is clearly a scenario in which one does envisage that sort of outcome [4,000 job moves].

Back to the UK labour market data. Alok Sharma, the employment minister, highlighted that the unemployment rate is the lowest since the mid-1970s while employment rate (which dipped today) remains near a record high, and that 1.45 million more children are living in a home with all adults in work.

Sharma said:

With unemployment rate still at its lowest level in 43 years, it is good to see that for the sixth month in a row wages have grown faster than inflation helping to put more money in people’s pockets. In the last quarter regular pay is up by 2.9%, 0.5% above inflation.”

Households across the country are benefiting from the security of being in work, and with increasing wages and GDP growth of 0.6% last quarter we are delivering an economy that supports working people.

Knight Frank’s latest global house price index shows that the world’s top hotspot is Malta. The Mediterranean island is leading the index for the first time with 17% annual house price growth, moving ahead of Hong Kong (16% growth). The report said a shortage of supply, combined with a robust economy (6.6% GDP growth in 2017) and a buoyant technology industry were pushing up demand.

Only seven of the 57 countries tracked registered falling prices over the 12 months to June, namely Ukraine, Peru, Saudi Arabia, Brazil, Italy, Finland and Israel. The UK is in 36th place, with 3% house price growth.

The report says about Turkey:

Turkey’s travails mean that although prices are rising at an annual rate of 11%, according to the latest data from the Central Bank of the Republic of Turkey, when inflation of 16%+ is factored in, prices in real terms are now falling.

More from Lisa O’Carroll.

JP Morgan vice chairman Mark Garvin brushed off Brexit staff disruption, saying the firm has seen more “tumult” in banking in his career. He told the Treasury select committee, chaired by Nicky Morgan, when being quizzed about cost of staff moves in Brexit contingency planning:

We have been through far more tumult than this. This is an event we can very well manage. Staff know they live in a changing organisation. Compared to digitisation and other kinds of disruption this is not a massive challenge.

Suren Thiru, head of economics at the British Chambers of Commerce also highlighted some areas of concern, in particular the “alarmingly high” number of job vacancies in Britain.

The robust headline data masks several areas of concern. While there was a welcome increase in earnings growth, the gap between pay and price growth remains insufficient to convert into an appreciable pick-up in consumer spending. Sustaining meaningful real wage growth is likely to remain challenging amid subdued productivity and the escalating burden of upfront costs on businesses.

The number of job vacancies in the UK remains at an alarmingly high level, further evidence of persistent skills shortages. While the number of people in work stands close to historic highs, firms continue to report that attempting to recruit staff with the right skills is an increasingly uphill struggle, which is stifling their ability to grow and boost productivity.

It is vital that more is done to support those businesses looking to recruit and train staff, including delivering an open and flexible immigration system to help firms attract and retain the people they need to compete on the global stage.

However, Julian Jessop, chief economist at the Institute of Economic Affairs, tweeted:

UK employment rose just 3,000 in the three months to July, taking the number of people in work to 32.397 million.

Andrew Wishart, UK economist at Capital Economics, was quick to respond to the labour market data. He says they suggest that

competition for workers is finally starting to provide greater support to wages. The slowdown in total pay growth in May and June was reversed in July...

Looking ahead, there is little sign that the recent slowdown in employment will prove permanent. Even the most pessimistic leading indicators point to employment growth of 1% y/y. Meanwhile, surveys of wage growth suggest that it will sustain a pace of about 3% y/y over the remainder of the year.

Despite today’s increase in wage growth, we still think that the MPC will hold off raising interest rates again until the near-term uncertainty due to the Brexit negotiations is resolved.

You can see what wage growth has done over the past few years in this graph:

So wage growth is faster than inflation, which is currently at 2.5%. Pay growth has picked up from the three months to June, when average earnings excluding bonuses grew 2.7% but rose just 2.4% when bonuses were included.

Unemployment fell by 55,000 to 1.36 million in the three months to July from the previous three months. However, the employment rate – the proportion of people aged 16 to 64 years who were in work – edged down to 75.5% from 75.6%.

The ONS’s head of labour market statistics David Freeman said:

With the number of people in work little changed, employment growth has weakened. However, the labour market remains robust, with the number of people working still at historically high levels, unemployment down on the year and a record number of vacancies.

Meanwhile, earnings have grown faster than prices for several months, especially looking at pay excluding bonuses.

Sterling rose as much as 0.4% to $1.3072 against the dollar in London trading this morning. Against the euro, it was more or less flat at 89.02 pence.

EU leaders are expected to hold a special Brexit summit in mid-November where they hope to sign off a divorce deal.

Back to the sterling rally, which was triggered by yet another hint from the EU’s chief negotiator Michel Barnier yesterday that a Brexit deal was possible (similar to last week). Paul Donovan, chief economist at UBS Global Wealth Management, has this pithy comment:

It may be a little undignified to have sterling’s value depend on the lightest word of a French politician.

He adds:

In the interminably tedious process of extricating the EU from the UK single market, something stirs. The historian Rees-Mogg completely failed to come up with an alternative to the government’s economic plan. This might strengthen Prime Minister May’s position.

And on the mooted second meeting between the US president and North Korea’s leader, Donovan says:

US President Trump is keen to meet North Korean leader Kim. This does not matter much. Markets worried about risks ahead of the last meeting. These risks have largely gone. Markets might possibly read Trump overlooking the apparent continuation of North Korea’s nuclear program as a signal of disinterest that could be applied to the trade negotiation details.

In corporate news, JD Sports Fashion’s rapidly-growing international business has helped it ride out Britain’s highstreet malaise. The sportswear chain posted pretax profits of £122m for the six months to 4 August, up 19%.

JD, which has shops in countries from Finland to Malaysia, said like-for-like sales rose more than 3% despite “widely reported retail challenges in the UK”. However this was due to strong online sales – like-for-like sales in stores were flat.

Profits in JD’s UK & Ireland stores have improved, though, following investments made in linking its online operations and highstreet shops.

The FTSE 100 index in London has slipped 0.2% on the firmer pound, while Germany’s Dax and France’s CAC are up 0.2% and 0.3% respectively.

The pound is up 0.2% against the dollar so far today. The EU’s chief negotiator in the Brexit talks, Michel Barnier, is in Strasbourg today, briefing MEPs.

A growing number of companies are preparing for a no-deal outcome, just in case – several pharmaceutical firms including AstraZeneca, Sanofi and Merck are stockpiling medicines in the event of a hard Brexit.

The Times reports that Mondelez, the owner of Cadbury, is stockpiling ingredients, chocolates and biscuits in case no deal is struck.

Hubert Weber, president of Mondelez Europe, said:

Like the whole of the food and drink industry in the UK, we would prefer a good deal that allows the free flow of products as that would have less of an impact to the UK consumer.

However, we are also preparing for a hard Brexit and, from a buffering perspective for Mondelez, we are stocking higher levels of ingredients and finished products, although you can only do so much because of the shelf life of our products. We have a continency plan in place to manage [a hard Brexit], as the UK is not self-sufficient in terms of food ingredients, so that could be a challenge.

He said he wished that Britain was “at a different stage [in negotiations with the European Union] at this stage” and hoped that a deal could be agreed by next year, otherwise British shoppers could face higher prices and fewer choices.