Speaking in Washington DC, Mr Bailey stated that while he took no political position on the UK’s departure from the EU, the resulting trade restrictions would continue to hamper growth. He acknowledged that while the economy should adapt over the long term, the immediate outlook remains negative. His comments align with recent remarks from the Chancellor, Rachel Reeves, who pointed to the “severe and long-lasting” economic effects of Brexit.

Mr Bailey was speaking at a global meeting of financiers where rising international trade barriers were a key topic. He placed Brexit within a broader context of growing protectionism, which also includes the Trump administration’s tariffs on the EU. On the same panel, European Central Bank President Christine Lagarde rebuked these US tariffs, arguing that such “coercive trade measures” would not fix underlying global economic imbalances, Financial Times reports.

The Governor cited Brexit, along with the UK’s ageing population and US trade policies, as significant restraints on the country’s potential growth. Referencing Adam Smith, he explained that making an economy less open inevitably restricts its expansion. To counteract these pressures, Mr Bailey stressed the need to boost investment in areas such as artificial intelligence (AI), but cautioned that AI could also challenge financial stability through “stretched valuations”.