LONDON
The governor of the Bank of England on Thursday urged the UK to prioritize rebuilding its long-term trade relationship with the EU, following breakthrough trade deals with both the US and India.
Andrew Bailey said that although he would not comment on the UK’s departure from the EU in 2020, reversing its trade effects would be “beneficial.”
Speaking to the BBC, Bailey said: “Having a more open economy to trade with the EU … would be beneficial, because there has been a fall-off in goods trade with the EU over recent years.”
The EU remains the UK’s largest trading partner, but exports in key sectors such as food and drink have dropped by more than a third since Brexit.
“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,” Bailey said. “So I hope that we can use this to start to rebuild that relationship.”
The comments came as the UK government, led by Prime Minister Keir Starmer, engages in fresh talks with the EU to reset trade relations.
A new UK-EU partnership is expected to be announced at a summit in London in 10 days’ time.
Earlier this week, the UK secured a long-anticipated trade deal with India.
Starmer described the agreement, which followed more than three years of negotiations, as a “landmark deal” that would cut tariffs and boost the UK economy by £4.8 billion ($6.3 billion) a year by 2040.
Bailey welcomed the progress, stating that “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. But I hope that we can use these deals to rebuild the world trading system.”
Meanwhile, the Bank of England on Thursday cut interest rates by 0.25 percentage points to 4.25% to shield the UK economy from growing global economic uncertainty.
However, the bank’s monetary policy committee signaled caution about further cuts, pending clearer evidence that inflation will return to its 2% target within two years.
Inflation stood at 2.6% in March and is expected to rise later this year.
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