Andrew Bailey, the Governor of the Bank of England, has openly called for the UK to rejuvenate its trading relationship with the European Union, emphasising that restoring trade ties could significantly aid the British economy. His remarks come in the lead-up to a key UK-EU summit in London—scheduled shortly after the withdrawal from the EU—where Prime Minister Keir Starmer is expected to unveil a strategic framework aimed at revitalising post-Brexit relations.
Speaking to the BBC, Bailey noted the notable decline in merchandise trade with the EU since Brexit, stating, “Having an open economy is more open to trading with the European Union … it will be useful.” He highlighted the urgency of reversing this trend to mitigate ongoing economic challenges, particularly as the UK works to redefine its position within global trade dynamics.
The backdrop to Bailey’s comments includes recent advancements on the international trade front, most significantly a new free trade agreement with India, which is touted as a “historic deal” that could inject an additional £4.8 billion into the UK economy by 2040. This agreement, marking the UK’s most substantial trade arrangement since leaving the EU, signals an effort to enhance bilateral trade, with India poised to reduce tariffs on a range of British goods, including whisky and automobiles.
Despite the euphoria surrounding the UK-India deal, Bailey remains acutely aware of the challenges posed by the enduring impact of post-Brexit trade barriers. His focus on the need to rebuild UK-EU relations underscores the importance of the EU as the UK’s largest trading partner, a fact often overshadowed by recent successes with other nations. Recent analysis indicates that the UK has also faced significant setbacks in trade relationships with EU countries, particularly for goods, which have suffered from non-tariff barriers introduced after Brexit.
At a recent economics conference in Reykjavik, Bailey stated that, while the current global economic situation remains volatile, it is imperative that central banks maintain a “strong and intelligent” approach to persistent uncertainties. He went on to indicate that the UK’s economic landscape is fraught with difficulties, including rising inflation, which currently stands at 2.6%. This inflation rate, alongside previously imposed higher tariffs following the UK’s exit from the EU, remains a concern for economic strategists trying to navigate the country back to stability.
The lingering effects of these challenges have drawn criticism from various business groups and unions, with organisations such as the British Chambers of Commerce and the Trades Union Congress arguing that more acute measures are required to assist struggling businesses and households facing economic hardship. The voices of those urging immediate fiscal support echo throughout recent discussions, particularly as the UK economy continues to grapple with rising living costs and limited consumer spending.
Bailey’s advocacy for a pragmatic approach to rebuilding UK-EU relations reflects a growing consensus on the importance of collaborative trade efforts, especially as the government prepares to present its renewed strategic framework. “We should not let the political difficulty stand in the way of prosperity in the long run,” he remarked, encapsulating the urgent need for an approach that not only seeks new partnerships but also revitalises established ties closer to home.
As the imminent summit approaches, the UK’s commitment to re-engaging with its European partners will be closely scrutinised, with Bailey’s recent comments serving as a clarion call for balance between respecting Brexit’s outcomes and fostering long-term economic growth through renewed international cooperation.
Reference Map
- Paragraph 1: Sources 1, 2
- Paragraph 2: Sources 1, 2
- Paragraph 3: Sources 3, 4
- Paragraph 4: Sources 1, 6, 7
- Paragraph 5: Sources 2, 6
- Paragraph 6: Sources 5, 6
- Paragraph 7: Sources 1, 2, 6
Source: Noah Wire Services
Subscribe to Industry Updates
