Bank of England warns Brexit will have ‘negative impact on UK economy’ | UK | News
The governor of the Bank of England has warned that Brexit will negatively impact Britain’s economic growth “for the foreseeable future”. Speaking at the G30’s 40th annual International Banking Seminar, Andrew Bailey said the country’s potential growth rate has fallen from 2.5 percent to 1.5 percent in the last 15 years. He attributed this to low productivity growth, an aging population and trade restrictions, including post-Brexit economic policies.
But Mr Bailey added that the economy would likely adjust and find “at least partial” equilibrium again in the long term. “For almost a decade I have been very careful to say that I take no position on Brexit, which is the decision of the people of the United Kingdom, and it is our duty as public servants to enforce that,” he told attendees at the Washington DC event.
“But I’m often asked a second question: What is the impact on economic growth? And as a public servant, I have to answer that question.
“The answer is that it is negative for the foreseeable future. But in the longer term, there will be at least a partial rebalancing as trade adjustments are made.”
The governor’s prediction comes as Chancellor Rachel Reeves prepares for next month’s budget, where she remains under pressure to introduce further tax increases after official figures in August showed slow growth following a surprise contraction in July.
Citing the work of 18th-century economist and philosopher Adam Smith, Mr Bailey said: “This is Smith’s model: making an economy less open restricts growth in the long run.
“You’ll get some adjustment over the long term. Trade is recovering, it’s rebuilding. And all the evidence we have from the UK suggests that’s exactly what’s happening.”
Gross domestic product (GDP) rose 0.1% month-on-month in August and fell 0.1% in July, the Office for National Statistics (ONS) said.
GDP in the three months to August also increased by 0.3%, compared to growth of 0.2% in July.
This follows the International Monetary Fund’s forecast earlier this week that inflation in the UK will rise to the highest level in the G7 in 2025 and 2026.
