A shift in trade patterns with Europe has weighed on the UK economy, Governor Andrew Bailey said.
Bank of England Governor Andrew Bailey has hailed the prospect of warmer relations with the EU, after an incoming Labour government pledged to reset a Brexit deal it said was “botched”.
Geopolitical shocks, a fragmenting world economy and an ageing population have all affected potential supply, a measure of the British economy’s productive capacity – but leaving the EU has also taken its toll, Bailey told an audience of financiers in London on Thursday.
“The changing trading relationship with the EU has weighed on the level of potential supply,” Bailey said, citing a particular impact on the goods trade.
“We must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people,” he added.
Keir Starmer, elected Prime Minister by a landslide in July, says he won’t rejoin the EU’s single market or customs union, which would require UK producers to follow EU regulations the country no longer has any say in.
But he has vowed negotiations to ease trade restrictions on travelling musicians and agri-food exports – for which current EU border controls require comprehensive checks and a vet’s signature.
In October, he met European Commission President Ursula von der Leyen and they pledged to strengthen cooperation “at pace”, in areas including the economy, energy and security.
The UK left the EU in 2020 after a referendum held in 2016. Starmer has been a frequent critic of a bare-bones deal his predecessor Boris Johnson negotiated that governed subsequent trade relations.
