UK must ‘rebuild’ EU ties after Brexit, says Bank of England boss

LONDON — The U.K. must “rebuild relations” with the European Union “while respecting the decision of the British people” to opt for Brexit, the governor of the Bank of England said.
In his most forthright comments on Britain’s departure from the European Union yet, the central banker told financiers in the City of London Thursday night that Britain’s changed relationship with the bloc had “weighed” on the economy, and taken its toll on goods trade in particular.
Giving a speech on growth at Mansion House, Bailey said openness in trade boosts “competition, innovation and specialization.”
“Now, as I have said many times, as a public official I take no position on Brexit per se,” he added. “That’s 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, 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.”
Britain’s new Prime Minister Keir Starmer has vowed to lead his Labour government in a “reset” of EU relations — a point hammered home by Chancellor Rachel Reeves in her own Mansion House speech.
“We will not be reversing Brexit or re-entering the single market or customs union,” she said. “But we must reset our relationship.”
Elsewhere in his speech, Bailey issued a resounding call for free trade amid concerns that U.S. President-elect Donald Trump will hike tariffs on goods from Britain.
“I will own up to being an old-fashioned free trader at heart,” he said. “It’s a British characteristic I like to think. My point is this: amidst the important need to be alert to threats to economic security, let’s please remember the importance of openness. Openness is an important determinant of productivity.”
The president-elect has pledged to impose up to 20 percent flat tariffs on imports to the U.S. — rising to 60 percent for China — leading U.K. officials to war-game how they can protect billions in exports.
The U.K. central bank has no say in trade policy, but would have to deal with any economic repercussions.