Bank of England Governor: Brexit Still Dragging Down UK Growth

The Governor of the Bank of England, Andrew Bailey, has warned, according to the Financial Times, that Brexit will continue to weigh on the UK economy “for the foreseeable future”. However, he expects a limited recovery over the longer term as the economy adapts.

Speaking at the “Group of Thirty” conference in Washington, Bailey said he took “no position per se” on Brexit but acknowledged that reduced access to EU markets remained a persistent drag on growth. “If you ask me what the impact is on economic growth,” he said, “the answer is that for the foreseeable future it is negative.” He pointed to falling trade openness, an ageing population, and international trade tensions as key factors limiting potential growth.

Bailey’s remarks followed comments by Chancellor Rachel Reeves, who described Brexit’s effects as “severe and long-lasting” as the Treasury prepared for a downbeat forecast from the Office for Budget Responsibility ahead of next month’s Budget. At the same Washington event, European Central Bank president Christine Lagarde criticised the Trump administration’s new tariffs on EU imports, calling them “coercive trade measures” that would not resolve global economic imbalances. IMF managing director Kristalina Georgieva noted that while the US had raised barriers, other countries had so far shown restraint in retaliating.

Bailey said the UK’s potential growth rate had fallen to about 1.5% over the past 15 years, compared to 2.5% in the previous two decades. He called for more investment in technology, particularly artificial intelligence, to help counteract structural weaknesses in the economy.

As we have consistently argued, we as Liberal Democrats believe that Britain’s economy will not reach its full potential outside the European Single Market. At our 2025 Spring Conference, we reaffirmed the goal of rebuilding a closer trading relationship with the EU, beginning with practical cooperation in areas such as youth mobility, research, and food standards - these are steps that would restore some of the openness Bailey identified as critical to long-term growth.