Bank of England Governor Calls for Stronger UK-EU Ties Post-Brexit
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Bank of England Governor Andrew Bailey has issued a call for the UK to "rebuild relations" with the European Union, marking his strongest public comments yet on the impact of Brexit, reports the BBC. While emphasizing that he takes "no position on Brexit per se," Bailey highlighted the negative consequences of the UK's departure, particularly the weakening of trade.
"The impact on trade seems to be more in goods than services... But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting that very important decision of the British people," Bailey stated in his Mansion House speech to investors.
Bailey's comments follow similar remarks last week regarding potential US tariffs under President-elect Donald Trump. Vicky Pryce, chief economic adviser to the Centre for Economics and Business Research, noted that the imposition of such tariffs could jeopardize the UK's special relationship with the US given the UK's substantial trade with Europe.
Assessing Brexit's economic impact has been complex due to multiple economic shocks. Independent analyses, including those by the Office for Budget Responsibility, estimate a 4% economic hit over 15 years as a result of Brexit. The negative impact has been particularly pronounced in goods trade, especially food and farm exports, due to new trade barriers.
While the government remains opposed to rejoining the EU, Chancellor Rachel Reeves has indicated a desire for a closer relationship.
"Our biggest trading partner is the European Union. We will not be reversing Brexit, or re-entering the single market or customs union. But we must reset our relationship," Reeves stated in her own Mansion House speech.
Bailey's speech also addressed broader UK economic challenges, including the decline in productivity since 2008 and the need for significant reform of the UK's fragmented pension system. He noted that the UK is not alone in facing these challenges, but highlighted the stronger economic performance of the US.