The governor of the Bank of England has said the UK must do “everything we can” to improve long-term trade by rebuilding ties with the EU.
Speaking ahead of a major EU-UK summit – a key part of Sir Keir Starmer’s “reset” mission with the European Union – Andrew Bailey urged the UK to prioritise rebuilding its trade relationship with the bloc.
“It is important we do everything we can to ensure that whatever decisions are taken on the Brexit front do not damage the long-term trade position. So I hope that we can use this to start to rebuild that relationship,” he told the BBC.
Asked what impact a closer relationship between the UK and the EU would have on the economy and inflation, Mr Bailey said: “It would be beneficial. Having a more open economy to trade with the European Union. Because there has been a fall-off in goods trade with the EU over recent years.”
And giving a speech on Friday morning at the Reykjavík economic conference, Mr Bailey urged policymakers to learn lessons from the global instability seen in recent years, stressing that the “global economic environment is likely to continue to be challenging – and less predictable – than it was in the past.”
While he said there is a now a “positive story to tell” as inflation returns to its target level, Mr Bailey warned against complacency and urged policymakers to “adapt and develop to ensure that our processes are nimble and robust”.
Mr Bailey’s remarks came after a UK-US trade deal was agreed on Thursday, as he said the deal set an example to nations around the world.
“It demonstrates that trade deals are important. Trade deals can be done, and the trade is important… honestly, it seems an unpromising landscape at times,” he told the BBC.
“I hope that we can use these deals to rebuild the world trading system.”
Sir Keir Starmer is expected to use next week’s summit to push for smoother trading relations with the EU.
Donald Trump unveiled the “historic agreement” with the UK on Thursday, marking the culmination of Sir Keir Starmer’s months-long charm offensive towards the US president.
The deal is the first the US has announced since Mr Trump’s tariff regime was introduced last month, and speaking to the prime minister from the White House, the US president said the agreement was a “great deal for both countries”.
The deal, which the UK government has said will save “thousands of jobs”, will see car export tariffs slashed from 27.5 per cent to 10 per cent, for a quota of 100,000 UK cars. This, the government said, is almost the total the UK exported last year.
Mr Trump’s 25 per cent tariffs on steel will be axed entirely, while a levy on ethanol – which is used to produce beer – coming into the UK from the US has been removed entirely.
In addition to this, the two governments have negotiated new reciprocal market access on beef, giving UK farmers a tariff-free quota of 13,000 metric tonnes of meat.
