Oct 18, 2025
Andrew Bailey, the Governor of the Bank of England, has stated that Brexit will have a negative impact on the UK economy for the foreseeable future. Speaking in Washington DC, Bailey warned that putting up trade barriers always damages growth.
While emphasizing he was not offering a personal view of Brexit, Bailey said that years of low UK productivity had driven up debt. He added, “Whats the impact on economic growth? As a public official, I have to answer that question – and the answer is that, for the foreseeable future, its negative.”
Bailey said the economy was adjusting slowly to new trading relationships with “some partial rebalancing” in trade already taking place. He also warned against erecting global trade barriers, stating, “If you make the world economy less open, it will have an effect on growth. It will reduce growth over time.” This was viewed as a thinly-veiled jibe at President of the United States Donald Trump.
Bailey added that trade does adjust and rebuild over the longer term, noting that evidence from the UK shows this is happening. His remarks coincided with an admission from the International Monetary Fund that steep tariff increases imposed by the US president had been less damaging than previously feared.
Britains position outside the EU has enabled it to negotiate lower tariffs with the US. The EU currently faces a 15pc levy on most goods exported to the US, compared with the UKs 10pc rate.
However, Bailey also warned that years of low productivity had pushed up debt. He calculated that if growth over the past 15 years had matched the average rate seen before the financial crisis, Britains debt-to-GDP ratio would now be 82pc instead of 96pc and would be below 80pc by the end of the decade. “That is a big difference,” he warned.
Chancellor Rachel Reeves is expected to blame Brexit in the Budget for the Office for Budget Responsibilitys widely expected decision to lower its long-term growth forecasts. Economists have warned that her record PS40bn tax raid has driven up prices and stifled growth, with the Chancellor expected to raise taxes by another PS30bn in her second Budget on Nov 26 to balance the books.
Bailey suggested that the lower “speed limit” of the economy made it harder for the Bank to keep rates low because the economy was now more vulnerable to inflation. He also warned of the risks posed from the rapid rise of private credit issued by non-banks, adding that policymakers would do more to “lift the lid” on the sector.