Britain must support free trade and rebuild its relationship with the European Union as the global economy fragments, said Bank of England Governor Andrew Bailey in a speech on Thursday.
Bailey stated that a commitment to open trade is vital for boosting the UK’s weak investment levels and reviving production growth, which includes unlocking capital from businesses and pension funds, as planned by Finance Minister Rachel Reeves.
Brexit, the UK’s departure from the European Union in 2020 following the 2016 referendum, contributed to a weakening of trade in the UK and harmed the country’s manufacturing capabilities, Bailey said.
“As a public official, I take no stance on Brexit itself. That’s important. But I must highlight its consequences,” Bailey remarked in his annual speech at Mansion House in London, addressing senior officials from the financial services industry.
“This underscores why we need to be vigilant and open to opportunities to rebuild relationships while respecting the decision of the British people,” he added.
While the new Labour government has ruled out rejoining the EU’s single market or customs union, Prime Minister Keir Starmer has stated that he wants to improve trade and diplomatic relations with the bloc.
Speaking at the London event, Finance Minister Rachel Reeves emphasized that Britain needs to “reset” its relationship with the EU and expressed eagerness to work closely with President Trump to strengthen trade ties.
Governor Bailey said that the UK should focus on a broader economic growth strategy and not just on the impact of leaving the European bloc.
While Bailey did not directly mention the U.S. elections in his speech, policymakers worldwide are closely examining what President Trump’s victory means for tariffs on exports to the United States. The head of the Bank of England noted that tariffs could have wide-reaching effects on global trade and inflation.
“The outlook is now clouded by the impact of geopolitical changes and the broader fragmentation of the global economy,” Bailey explained.
“Amid the significant need to remain vigilant on threats to economic security, let’s remember the importance of openness… We must do what we can to preserve an open economy,” Bailey concluded. He expressed support for the government’s plans to increase public investment.
