{"id":705923,"date":"2026-01-19T07:42:42","date_gmt":"2026-01-19T07:42:42","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/705923\/"},"modified":"2026-01-19T07:42:42","modified_gmt":"2026-01-19T07:42:42","slug":"bailey-warns-of-long-lasting-growth-drag-from-brexit","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/705923\/","title":{"rendered":"Bailey warns of long-lasting growth drag from Brexit"},"content":{"rendered":"

Stay informed with free updates<\/p>\n

Simply sign up to the Global Economy myFT Digest — delivered directly to your inbox.<\/p>\n

Brexit will have a negative impact on the UK economy for the \u201cforeseeable future\u201d, the Bank of England governor has warned, adding that the economy would eventually adapt to Britain\u2019s exit from the EU.<\/p>\n

Speaking in Washington, DC, Andrew Bailey said that he took \u201cno position per se\u201d on Brexit, but added that restricted access to trade resulting from the UK\u2019s departure from the bloc would continue to hamper growth.<\/p>\n

\u201cIf you ask me what the impact is on economic growth, I do have to answer that question as a public official,\u201d Bailey said. \u201cAnd the answer is that for the foreseeable future it is negative, but over a longer time there should be a positive, albeit partial, counterbalance.\u201d<\/p>\n

Bailey was speaking after Rachel Reeves<\/a>, the chancellor, pointed this week to \u201csevere and long-lasting\u201d effects from Brexit as the Treasury braced for a tough verdict from the Office for Budget Responsibility on the growth outlook in next month\u2019s Budget.<\/p>\n

Labour has tried to lower barriers with Brussels in areas such as youth mobility and food and agriculture trade, but analysts have played down the scale of any economic dividends from those efforts.\u00a0<\/p>\n

Bailey was speaking after a week of IMF and World Bank meetings in which central bankers discussed the impact of rising barriers to trade around the world in a period of subdued growth and rising public debt.\u00a0<\/p>\n

On the same panel, European Central Bank president Christine Lagarde rebuked the Trump administration\u2019s punitive tariffs on the EU.<\/p>\n

The US president has imposed a 15 per cent levy on almost all imports in a bid to eliminate the trading bloc\u2019s trade surplus with the world\u2019s biggest economy.<\/p>\n

Trump believes the trade surplus has allowed EU exporters to profit at the expense of their US counterparts and American jobs.<\/p>\n

But Lagarde warned that the\u00a0US\u2019s \u201ccoercive trade measures\u201d would not correct long-standing instabilities in its relationship with the rest of the world, which economists have dubbed \u201cexternal imbalances\u201d.\u00a0<\/p>\n

Lagarde added that the EU\u2019s trade surplus with other economies \u2014 including the UK \u2014 was far larger than with the US.<\/p>\n

While she said the EU was \u201ca major player in trade\u201d, she added that the bloc was \u201cnot a key source of global imbalances and its contribution [to these imbalances] has been steadily declining\u201d.<\/p>\n

Kristalina Georgieva, managing director of the IMF, added that while US barriers had increased, retaliation by other countries had been relatively limited.<\/p>\n

Bailey pointed to Brexit as one of a number of factors restraining the UK\u2019s growth potential, including its ageing population and Trump\u2019s trade policies.<\/p>\n

Recommended<\/p>\n

\"Aerial<\/a><\/p>\n

\u201cThe growth model of Adam Smith is clear on this point,\u201d he said. \u201cMake an economy less open and it will restrict growth, though over a longer time trade will adjust and rebuild. And this appears to be what has happened. The same argument holds for the world economy and tariffs.\u201d\u00a0<\/p>\n

Bailey said that the potential growth rate of the UK economy had declined to about 1.5 per over the past 15 years, compared with about 2.5 per cent a year in the preceding 20 years.\u00a0<\/p>\n

He was speaking at a conference of Group of Thirty, a body of financiers and academics. <\/p>\n

Bailey also stressed the need to boost investment in areas including AI to counteract the restraints on growth.<\/p>\n

He said there was \u201cnothing inconsistent\u201d in believing that AI was the next big technology while being concerned that \u201cit may along the way challenge financial stability through stretched valuations, and particularly in an environment of larger global supply shocks\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the Global Economy myFT Digest — delivered directly to…\n","protected":false},"author":2,"featured_media":705924,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5226],"tags":[802,748,2000,299,5187,1699,4884,16,15],"class_list":{"0":"post-705923","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-brexit","8":"tag-brexit","9":"tag-britain","10":"tag-eu","11":"tag-europe","12":"tag-european","13":"tag-european-union","14":"tag-great-britain","15":"tag-uk","16":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115920643254685826","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/705923","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=705923"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/705923\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/705924"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=705923"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=705923"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=705923"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}