Bank of England Chief Calls for Post-Brexit EU Relations Rebuild to Boost UK Trade
Bank of England Chief Calls: Bank of England Governor Andrew Bailey has called for rebuilding ties with the EU to help strengthen the UK economy, while respecting the Brexit decision made by voters in 2016. In his Mansion House address, Bailey addressed the economic impact of Brexit, noting weaker trade levels, particularly in goods, which have weighed heavily on the UK economy.
While Bailey has typically refrained from Brexit commentary due to the Bank’s political neutrality, his latest remarks highlight the need to mend economic relations with the EU. He clarified that while he doesn’t take a political stance, he must address Brexit’s economic effects. He explained that the UK’s diminished relationship with the EU has disproportionately affected goods trade, especially exports in food and agriculture, although the service sector has fared better than expected.
Bailey’s comments come alongside an Office for Budget Responsibility (OBR) forecast that estimates Brexit will reduce UK economic growth by 4% over 15 years. Despite this, UK Prime Minister Keir Starmer and some EU officials, including Spain’s Finance Minister Carlos Cuerpo, have expressed hope for a stronger UK-EU relationship.
In addition to Brexit, Bailey noted other pressing economic concerns, such as global fragmentation and geopolitical tensions. He warned against focusing solely on Brexit’s effects while neglecting broader global economic shocks, which could further impact UK trade and investment.
Chancellor Rachel Reeves also spoke at the Mansion House event, proposing pension fund reforms aimed at increasing growth. She suggested merging council pension funds to allow for more significant, growth-generating investments, though some critics warn of potential risks. Reeves emphasized that regulations implemented after the 2008 financial crisis may have limited the UK’s financial growth potential, and she proposed new measures to restore the UK’s global financial status.
As part of her agenda, Reeves revealed plans for a comprehensive financial strategy to be published next spring. This strategy will target fintech, sustainable finance, capital markets, and asset management, underscoring sustainable investment as a prime opportunity for economic revitalization.
Bailey also pointed out that the UK’s productivity growth has been sluggish since the 2008 financial crisis, placing it behind the US, which has shown stronger economic resilience. Both Bailey and Reeves emphasized that revamping the UK pension system would require “heavy lifting” to streamline its fragmented structure and make it more conducive to economic growth.
Conservative figures, such as Shadow Chancellor Mel Stride, voiced cautious support for Reeves’ pension reform plans but criticized Labour’s broader budgetary approach. Stride suggested that Labour’s fiscal policies might deter investment, undermining efforts to spur economic growth.
The remarks from Bailey and Reeves come at a time when the UK government faces pressure from businesses to encourage economic expansion while managing rising taxes intended to support public services.
