Brexit warnings ‘exaggerated’ says Bank governor
The worst predictions for the effects of Brexit were exaggerated and it has actually created “opportunities”, the Bank of England governor Andrew Bailey has claimed.
While conceding that the short-term impact had hit productivity and growth, he said in an interview that it had the potential for positive outcomes.
“I think the post-Brexit landscape does give us opportunities,” he told Prospect magazine. “You know, I’ve always said, not everything about EU regulation was best-suited to any national circumstances.
“If you go back to the period after the referendum, there were pretty dire predictions about the consequences of Brexit for the financial services world, for the City of London. And I think so far those effects have been smaller.”
Mr Bailey also warned of the danger of “further large shocks that we don’t know about”, as financial markets fret over a sustained period of high interest rates.
He warned that the global political world was more unstable and that central banks “had to be prepared for whatever comes next. There could be very large shocks that we don’t know about at the moment.”
His comments came as financial markets expect borrowing costs to stay higher for longer. Yields on US treasuries and UK long-duration gilts surged, with analysts warning that such movements had heralded stock market crashes in the past.
The governor defended the Bank’s series of interest rates rises and claimed to have been vindicated after warning about surging food prices.
He said the government had to share in the task of taming inflation. “In the short run, the response has to come from monetary policy,” he said.
“But in the medium to long term, it often involves a broader set of issues in terms of choices and policies that go beyond the Bank of England’s responsibility.”