THE governor of the Bank of England has said the UK must “rebuild relations” with the EU, adding that one of Brexit’s key consequences has been weaker trade.
Andrew Bailey made the comments in his Mansion House speech in London to investors on Thursday evening, despite previously avoiding commenting on the UK leaving the bloc.
Bailey’s predecessor, Mark Carney, did warn about the potential economic impacts of Brexit before the referendum in 2016.
The Office for Budget Responsibility and other independent analysts estimate the economy will take a 4% hit over 15 years as a result of Brexit.
Bailey said the changed relationship with the EU has "weighed" on the economy.
He said: “I’ve said many times as a public official I take no position on Brexit per se and that’s very important, but I do have to point out consequences.
“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, which I don’t think is particularly surprising, but it underline why we must be alert to and welcome opportunities to rebuild relations while respecting that very important decision of the British people.”
Chancellor Rachel Reeves also said in her Mansion House speech there could be a closer relationship with the EU despite the Government continuing to be against rejoining.
Brussels has, however, made clear it is unwilling to hold wide-ranging negotiations on the trade and cooperation agreement (TCA).
Last month, Labour Treasury Minister Tulip Siddiq admitted that more had been spent withdrawing from the EU than the “black hole” in the UK’s finances.
He made a similar comment last week when asked about US President-elect Donald Trump and his threat to impose tariffs of up to 20% on imports.
Bailey said he was opposed to this approach, calling himself “an old-fashioned free trader at heart”.
Experts at the National Institute of Economic and Social Research have warned that if Trump goes ahead with his plan for a universal tariff of 10% on all imports, it could cut the UK’s growth rate next year to 0.4%.
Bailey's speech went on to address the wider UK economy and its lack of growth.
He described how productivity has fallen since the 2008 economic crash and has not recovered since.
He said the UK is not alone in having this problem, which he said also affects other parts of Europe, but insisted that the US has "a better story to tell".
