A former West Midlander has been promoted to deputy governor of the Bank of England – raising the prospects of his eventually taking over the reins from Mervyn King.

Ex-Codsall High School pupil Paul Tucker, the Bank of England’s head of markets, steps up as the new deputy, replacing Sir John Gieve as the Bank’s head of financial stability.

Mr Tucker, aged 50, is now seen by many as favourite to succeed current governor Mervyn King, who recently started a second five-year term at the helm.

The former Staffordshire schoolboy has long been considered a rising star. He has been at the Bank for his entire career, and begins a five-year stint next March.

He attended Codsall High School, near Wolverhampton, in the 1970s, played cricket for the local village team and ran for a local athletics club.

He later attended Trinity College, Cambridge, before starting a lengthy career at the Bank of England in 1980.

He has extensive financial markets experience, both at the Bank and in the commercial banking world, and is highly respected in the City and internationally, although viewed by some as a ruthless operator.

Mr Tucker has been on the Bank’s rate-setting committee since 2002, gaining wide experience of monetary policy.

The appointment was announced at the Treasury select committee by Chancellor Alistair Darling, who said: “Paul will be a key member of the team leading the Bank’s work during the current financial and economic challenges we face.”

The Chancellor praised Mr Tucker’s “first-rate market knowledge and extensive central banking experience, including as a long-standing member of the Monetary Policy Committee.”

Mr Tucker said he was looking forward to working with the “Governor and the Bank team, the Tripartite Authorities, market counterparties and overseas central bank colleagues to address the financial stability challenges ahead.”

Some financial commentators view Mr Tucker’s appointment as a triumph for Bank insiders, with the Deputy Governor’s role not handed over to a career Bank official since the Government granted it independence in the early days of New Labour’s reign in 1997.

Days before Lehman Brothers collapsed, Mr Tucker told the Treasury select committee in September: “Generally, our banking system is probably somewhat less fragile than during last autumn.”

Now, in the face of the worst recession for nearly two decades, Mr Tucker is set to play a key role in Bank policy to mitigate the potential effects of the deepening global downturn.

Meanwhile, prominent Monetary Policy Committee member David Blanchflower, who has consistently called for interest rate cuts, is not seeking a second term with the MPC.

The Chancellor said Mr Blanchflower’s commitments in the US had made a second term impossible.

In a letter to Mr Darling, Mr Blanchflower said: “My intention all along was to only serve a single term, having been given three years’ sabbatical leave from Dartmouth College.”

In his reply, Mr Darling said: “In these difficult times, it is important that we have people that energetically put forward expert and challenging analysis and views to help shape the debate.”