Bank chief tells Chancellor: UK needs closer EU bonds for economic boost
Bank of England Governor pushes for stronger EU trade links during Mansion House meeting. Plans emerge to change financial rules while keeping Brexit intact‚ as US election results add new trade concerns
At yesterdays Mansion House dinner Andrew Bailey met with Chancellor Rachel Reeves to discuss UKʼs economic path - a talk that brought up some hard-to-ignore facts about Britainʼs post-Brexit reality
The first half of 2020s hasnt been kind to UKʼs economy; its growth fell to just 1.3% (compared to pre-2008 numbers). Bailey pointed out that Britain now looks more like its European neighbors than America in terms of economic performance: “The changing trading relationship with the EU has affected our potential supply‚“ he stated
In response to these concerns Reeves outlined her multi-step plan:
- Change financial rules to support growth
- Create mega-sized pension funds worth £50bn+
- Make banking sector more competitive
- Build stronger ties with EU‚ US and China
The timing of this meeting is interesting - coming right after Donald Trumpʼs victory which might affect global trade next year. “We must reset our relationship with EU without reversing Brexit or re-joining single market‚“ Reeves explained‚ while also pointing out US as Britainʼs key financial services partner
The Bankʼs analysis shows COVID lockdowns hit public sector productivity hard‚ and Brexit brought its own set of challenges. Catherine Mann‚ a rate-setter at the Bank warned that new trade barriers could push prices up; “Latest political developments across Atlantic wont make things easier for UKʼs output and inflation“
To fix these issues‚ Reeves is changing how regulators work: theyll focus more on growth than just managing risk. Sheʼs also planning to merge local government pensions into larger funds - potentially creating £80bn for business investment. The reforms include relaxing rules about bankerʼs bonuses and yearly fitness checks for executives
