The governor of the Bank of England has urged ministers to “rebuild relationships” with the EU, warning that Brexit has undermined the UK economy.
Speaking at dinner at Mansion Home in London Metropolis on Thursday night, Andrew Bailey said he had not taken any position on Brexit “per se”, but added: “I have to point out the consequences.”
He said Brexit had “weighed” on the economy, pointing out explicitly the impact of Brexit on UK trade in goods. “It underlines why we must be alert and welcome opportunities to rebuild relationships while respecting the choice of the British people,” he added.
Bank governors traditionally refrain from wading into contentious political issues, but Bailey’s predecessor, Mark Carney, did warn about the potential economic impacts of Brexit ahead of the 2016 referendum.
Services exports have performed well since the UK left the EU, but some goods exporters, especially smaller companies, have struggled with so-called “non-tariff barriers” such as customs checks.
Keir Starmer’s government has committed to deepening cooperation with the EU, although Brussels has made clear that it is not willing to hold wide-ranging negotiations on the trade and cooperation agreement (TCA).
Labor opposes re-entering the EU’s single market or customs union. Instead, the government hopes to achieve more modest changes, such as mutual recognition of professional qualifications and a veterinary agreement that could ease the need for controls on food exports.
The Bank governor spoke in the context of Donald Trump’s threat to impose tariffs (taxes on imports) on all foreign products sold to the United States.
Bailey said he opposed this approach and called himself “an old-fashioned free trader at heart.”
“My point is this: Amid the important need to be alert to threats to economic security, let us remember the importance of openness,” he said.
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