The Governor of the Bank of England has called on ministers to “rebuild relations” with the European Union, highlighting how Brexit has negatively impacted the UK economy.
During the Mansion House dinner in London on Thursday evening, Andrew Bailey clarified that he held no specific stance on Brexit itself but stated, “I do have to point out consequences.” Bailey explained that Brexit has “weighed” on the UK's economy, particularly affecting trade in goods. “It underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people,” he remarked.
Traditionally, Bank governors avoid commenting on divisive political matters, though Bailey’s predecessor, Mark Carney, had warned about the economic consequences of Brexit ahead of the 2016 referendum.
While services exports have performed well since the UK left the EU, some goods exporters, especially smaller businesses, have struggled with non-tariff barriers, such as customs checks.
Keir Starmer’s government has pledged to enhance cooperation with the EU, although Brussels has indicated it is not inclined to engage in broad negotiations concerning the trade and cooperation agreement (TCA). Labour maintains its position against re-entering the EU’s single market or customs union, instead aiming for more achievable outcomes like mutual recognition of professional qualifications and an agreement that could reduce checks on food exports.
Bailey's comments also came amidst the context of Donald Trump’s threats to impose tariffs on all foreign goods sold to the US. Bailey expressed his disapproval of this potential move, describing himself as "an old-fashioned free trader at heart."
“My point is this: amidst the important need to be alert to threats to economic security, let’s please remember the importance of openness,” he said.
Experts at the National Institute of Economic and Social Research have cautioned that if Trump proceeds with his plan to impose a universal tariff of 10% on all imports, the UK’s growth rate could drop to a mere 0.4% next year.
Rachel Reeves, the Chancellor, also spoke at the event, which is an annual gathering of the UK’s financial community. In her speech, she commended the City as the “crown jewel” of the British economy and argued that post-crisis financial regulation had "gone too far."
Comments