Brexit Has Damaged UK Economy, Says Bank Of England Governor

Brexit has damaged the UK economy and the government should build closer relations with the European Union, the governor of the Bank of England has said.

Andrew Bailey said there had clearly been “consequences” as a result of the 2016 vote to quit the EU.

Speaking at Mansion House in London last night, Bailey said he had “no position on Brexit per se”.

“But I do have to point out the consequences,” he said. “The changing trading relationship with the EU has weighed on the level of potential supply.

“The impact on trade seems to be more in goods than services, that is not particularly surprising to my mind.

“But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people.”

“The picture is now clouded by the impact of geopolitical shocks and the broader fragmentation of the world economy,” he added.

Bailey’s comments will be welcomed by the government, which is looking to improve trade with the EU and making changes to the deal struck with the bloc by the last Tory government.

Chancellor Rachel Reeves told the BBC: “Whatever your views on Brexit, it is the case that it is harder today for British businesses to trade with companies and sell to consumers within the European Union.

“That’s no good for growth and for living standards in Britain, so we want to reset those relations.”

Molly Scott Cato, senior vice chair of the European Movement UK, said: “As an economist I’m not at all surprised that making trade harder with our largest export market has had a negative impact on our economy. But we don’t have to just take this on the chin.

“There are actions we can take to address the trade barriers imposed by Brexit. Reaching a veterinary agreement to cut red tape and reduce border checks would be a practical first step.

“However, significant economic benefits will remain out of reach unless the government is willing to choose a better deal with Europe above Trump’s US and above other deals which risk undermining our standards, join at least the EU customs union and then build from there.”

Bailey’s comments come two months after experts said the economic impact of Brexit is getting worse as time goes on.

According to Aston University Business School, the value of UK goods exported to the UK was 27% lower – and imported goods 32% lower – compared to what the economy may have looked like if Brexit had not happened.

Leaving the single market in January 2021 has had a “profound and ongoing” impact on Britain’s trade with the EU, according to the economists’ modelling.

The variety of exported goods has also declined, with 1,645 fewer types of British products sent to every EU country and many manufacturers no longer sending their produce to the bloc.