By The South Asia Times

LONDON - Bank of England Governor Andrew Bailey has called on UK ministers to rebuild relations with the European Union, emphasizing that Brexit has had a measurable impact on the country’s economic performance. Speaking at the prestigious Mansion House dinner in London on Thursday evening, Bailey outlined the challenges Brexit has posed to the UK, particularly in the trade of goods.

Brexit's Economic Impact

Bailey acknowledged the economic consequences of Brexit, stating that it has “weighed” on the UK economy. While he refrained from taking a political stance on Brexit itself, he highlighted the tangible obstacles that British exporters, especially smaller firms, have faced since the UK left the EU.

One of the key issues has been non-tariff barriers, such as customs checks, which have disrupted the flow of goods between the UK and the EU. These barriers have particularly burdened smaller businesses that lack the resources to navigate complex post-Brexit trade requirements.

Bailey noted that while services exports have remained robust in the post-Brexit era, the trade of goods continues to encounter significant challenges. His comments suggest an urgent need for policymakers to address these hurdles and explore ways to improve trade relations with the EU.

A Shift in Tone on EU Relations

Bailey’s remarks align with a growing sentiment in political circles advocating for closer cooperation with the EU, albeit within the boundaries set by the 2016 referendum. Labour Party leader Keir Starmer, for example, has pledged to deepen ties with the EU while ruling out rejoining the single market or customs union.

Labour’s proposed approach focuses on pragmatic changes, such as securing mutual recognition of professional qualifications and negotiating a veterinary agreement to simplify food export checks. These steps aim to ease trade friction without undermining the UK’s sovereignty—a priority for both political leaders and voters.

Global Trade and Economic Openness

In addition to addressing Brexit, Bailey spoke about the broader challenges of global trade in an increasingly protectionist environment. Citing rising economic nationalism, he expressed opposition to protectionist policies like tariffs, which he believes undermine global economic stability.

Bailey reaffirmed his belief in economic openness, describing himself as “an old-fashioned free trader at heart.” In a subtle critique of recent global trends, he stressed the importance of maintaining open trade policies, even amid growing concerns over economic security.

His comments come amid global trade tensions, including recent remarks by US President-elect Donald Trump, who has threatened to impose import taxes on all foreign goods sold in the United States.

Echoes of Past Warnings

Bailey’s speech follows a pattern of cautionary remarks from central bankers about the economic risks of Brexit. His predecessor, Mark Carney, warned before the 2016 referendum that leaving the EU could have long-term economic consequences. Bailey’s comments reflect the reality of those warnings, as businesses continue to navigate the complexities of a post-Brexit trade landscape.

The Path Forward

As the UK grapples with the ongoing challenges of Brexit, Bailey’s call for rebuilding EU relations underscores the need for a balanced approach that respects the referendum outcome while addressing the economic hurdles it has created.

By focusing on targeted agreements to ease trade friction and supporting exporters in adapting to new trade rules, the UK has an opportunity to mitigate the economic impact of Brexit. However, such efforts will require political will and collaboration between government, businesses, and international partners.

Bailey’s speech serves as a reminder that while Brexit is a settled political issue, its economic repercussions remain a pressing challenge that demands proactive and pragmatic solutions.