Brexit has created opportunities for the UK, says BOE governor
BANK of England (BOE) governor Andrew Bailey said Brexit has “created opportunities” for Britain’s financial regulators, and has had a smaller impact on the City of London than expected.
In an interview with Prospect magazine, he acknowledged that leaving the European Union (EU) would have negative economic effects in the short run, but stressed he was an inherent optimist about the UK.
His comments, which largely balanced short-term-losses impact against regulatory advantages, set him in contrast with his predecessor Mark Carney, who was recently named chair of Bloomberg, the parent company of Bloomberg News.
Carney was a vocal critic of Brexit. And while the BOE estimates that leaving the EU has cost between 3 per cent and 4 per cent of the country’s gross domestic product, Bailey’s description of the impact was more upbeat than that of his predecessor.
Bailey stuck to the BOE line, saying: “If you reduce the openness of an economy, in the short run it will have negative effects. It will have a negative effect on productivity, it will have a negative effect on growth.”
But he dismissed early apocalyptic warnings about UK financial services being hollowed out as industry moved to Europe. Those have proved mostly unfounded, he said. Leaving the EU has enabled the UK to shed regulations that the BOE had long opposed, such as the bonus cap.
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“It has actually created opportunities,” Bailey was reported by Prospect as having said. “We have protected and, in a sense, ensured that much of the market and much of the industry remains here. And that’s been important.”
“We will have to work even harder to make sure we don’t become isolationist.”
He stressed that he was neutral on the outcome of the 2016 referendum, saying: “In the longer run, you know, those trading relationships adjust in the real economy, and we build new trading relationships. And in the longer run, you adjust for it.”
“But in the short run, there’s a misalignment, if you like, in that sense. And, you know, if people say: ‘Well, that means he’s obviously a Remainer’, I’ll say: ‘No, no, I take no position’. But I do feel I have a responsibility to point out the economics.” BLOOMBERG
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