The governor of the Bank of England, Andrew Bailey, has issued his own sobering warning about the long-term impact of Brexit, saying that the economic consequences of leaving the European Union will last “for the foreseeable future.”
Speaking in Washington DC to a gathering of central bankers around the world, Bailey said he did not comment on Brexit as a political issue but as an economic reality.
“It is my duty as a public official to carry out the decision taken by the people of the UK,” he said. “But if you ask me what is the impact on economic growth, I have to answer that question – and the answer is that, for the foreseeable future, it is not good.”
He added: “In the long run, there should be some positive, negative and partial, as the economy adjusts.”
The comments represent the most obvious acknowledgment so far from the bank that the departure of the UK from the EU continues to receive output, production, and trade.
Bailey said Brexit has bought the opening of the British economy, hindering the potential for growth even for businesses that have adapted to the new trading conditions.
“Make the economy less open and you will limit growth,” he said. “Even in the long term, the trade will adjust and rebuild – and this seems to have happened.”
He compared the UK’s experience with global trade conditions caused by new US tariffs, including the sweeping duties recently imposed by President Donald Trump on many countries. “The same conflict is affecting the country’s economy and tax rates,” Bailey said.
His comments came as the bank continues to weigh the timing of a possible interest rate cut amid persistent economic pressures and reduced growth.
Chancellor Rachel Reeves also described brexit as the key factor behind the UK’s economic crisis and a “strong financial backrop” heading into her 26-year budget.
In a recent interview with Sky News, Reeves said: “There is no doubt that the impact of Brexit is severe and long-lasting. People think the UK economy will shrink by 4 per cent as a result of Brexit.”
That sees projections from the Office of the Budget (OBR), which has resulted in the departure of the UK from the EU will reduce output beyond 4 percent compared to remaining within the single market.
Reeves is said to be exploring both tax cuts and spending to meet his budget while addressing what he described as “a legacy of a weak economy.”
While Bailey did not specify which areas of the economy were most affected, the Bank has indicated that Brexit has affected trade in goods and services, forced investment, and labor supply.
He suggested, however, that the UK could eventually re-establish a new trading relationship and partially recover from the shock. “Over time, the trade balances out,” he said, but it takes years, not months. “
Bailey also warned that post-Brexit growth
He said: “If the denominator grows less,” it means that affecting economic policy becomes more difficult. “
In a wide-ranging speech, Bailey also touched on the economic potential of artificial intelligence, warning that they may drive new knowledge and pose new risks to financial stability.
“There’s nothing inconsistent with thinking that AI is the next big technology and worrying that it could challenge financial stability in an extended fashion,” he said.
Marker’s PredererOr Mark, now the prime minister of Canada, chose to examine the same before the 2016 index when he warned that leaving Britain could be Britain. While Carney’s words were attacked by pro-brexit politicians, Bailey’s intervention – almost a decade – suggests the economic costs of the UK’s decision to leave the bloc remain the defining issue of monetary and fiscal policy.
