Bank of England Governor Andrew Bailey has warned that Brexit continues to act as a drag on Britain’s economic growth and serves as a warning to the world about the dangers of trade barriers.
Speaking at an economic forum in London, Mr Bailey said the UK was still adjusting to the “significant and lasting” effects of leaving the European Union, which had created frictions in trade, investment, and labour markets.
“The lesson from Brexit is clear,” he said. “When you put up barriers to trade, growth suffers. These effects don’t vanish overnight they persist, and the adjustment is slow and costly.”
The Bank of England expects the economy to remain below the level it might have reached if the UK had stayed in the EU. The Office for Budget Responsibility estimates that Brexit will reduce long-term productivity by around 4%.
Mr Bailey noted that while many firms have adapted to the new trading environment, the process has been gradual. “Firms can and do adjust, but that takes time and investment,” he said. “In the meantime, it means lower growth, weaker exports, and slower productivity gains.”
He also warned that an ageing population and slower diffusion of new technologies are adding to the economy’s challenges.
Bailey’s remarks come amid growing global concerns about protectionism and trade fragmentation. He said other countries should heed the UK’s experience.
“The costs of closing off trade are real and persistent,” he said. “Open markets remain one of the most powerful drivers of growth and prosperity.”
The Bank of England has kept interest rates steady in recent months as inflation continues to ease, but officials remain cautious about the outlook, citing weak investment and subdued productivity growth.
