Bank of England Governor Andrew Bailey has called for a renewed focus on bolstering the UK’s trade and financial relations with the European Union, highlighting the pressing economic challenges that have emerged since Brexit and against the backdrop of increasing protectionist measures worldwide. Speaking in Dublin, Bailey welcomed the UK government’s recent agreement with the EU, which has streamlined customs procedures and aligned UK food standards with those of the bloc. However, he cautioned that this deal fails to sufficiently address the long-term economic difficulties the UK now faces.
Bailey noted that while initiatives like the Windsor Agreement—which aims to ease trade relations between the UK and Ireland—are positive steps, they are not comprehensive solutions. He urged that further actions are necessary, especially in the realm of financial services, to secure London’s preeminence as a global financial centre.
His comments underscore a growing concern regarding the repercussions of Brexit, particularly the increase in non-tariff barriers that have been identified as hinderances to productivity and overall growth. According to Bailey, the reduction in trade levels due to such barriers, akin to the impacts of imposed tariffs, is detrimental to the UK economy. He emphasised, “If the level of trade is lowered by some action, it will have an effect to reduce productivity growth and thus overall growth.”
This message comes as Labour leader Sir Keir Starmer’s government faces criticism from both within his party and from Brexiteers regarding its approach to EU relations. Although the recent agreement has been characterised by some critics as “the worst of both worlds,” Bailey’s plea for deeper alignment highlights the need for cooperation that benefits not just the UK, but also the EU, fostering mutual economic growth.
Amidst this backdrop, Bailey echoed elements of former President Donald Trump’s critiques concerning global trade norms, recognising the urgent need to reform international trade rules that are increasingly under strain. He remarked on the detrimental effects of China’s industrial subsidies on fair trade, suggesting that current multilateral trading systems are showing signs of dysfunction. While he refrained from endorsing Trump’s tariffs, he acknowledged that such measures signal broader issues in the global trading framework, asserting, “If it is believed that tariff action is needed to create the shock and awe to get these issues on to the table and dealt with, then something has gone wrong with the multilateral system.”
Bailey’s address has reinvigorated discussions around the need for a more pragmatic post-Brexit trade policy, one that prioritises economic engagement over insular approaches. He concluded with a strong emphasis on the necessity of diversifying supply chains and consolidating partnerships with those who adhere to international regulations.
His remarks serve as a clarion call for a strategic pivot towards enhancing cooperative trade policies with Europe, aimed at safeguarding the UK’s economic future while navigating the complexities of a global marketplace that is increasingly characterized by fragmentation and uncertainty. As political discord over the UK’s future relationship with the EU persists, Bailey’s insights may present a roadmap for aligning economic strategies that benefit all stakeholders involved.
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Source: Noah Wire Services
