Andrew Bailey will regret reopening the Brexit debate

Business taxes are soaring. Employment rights have been massively extended, the trade unions are getting more powers, companies are too dependent on low-skilled immigrants, and the planning system still makes it impossible to build anything. There are plenty of challenges facing the British economy that the Governor of the Bank of England Andrew Bailey could have drawn attention to in his Mansion House speech last night. And yet, instead he decided to reopen the Brexit debate. That was surely a mistake.

Addressing the City alongside the Chancellor Rachel Reeves on Thursday, Bailey argued that relations with the European Union were crucial to getting the British economy moving again. He took no position on Brexit ‘per se’ he argued, a little disingenuously since the Bank has always been very clearly against it, but insisted he had to ‘point out consequences’. Leaving the EU, he said, had ‘weighed’ on the economy, especially on the UK’s trade in goods. ‘It underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people,’ he added

Seriously? In reality, there are two big problems with Bailey’s decision to reopen that can of worms. First, the slowdown in the Eurozone suggests that much of the EU is in even worse shape than we are. While growth has ground to a halt in Britain, it has also stopped in France and Italy, and Germany, once the powerhouse of the continent’s economy, may soon have slipped into a full-blown recession. If the EU and its Single Market are so crucial, why are they not doing better than we are? Next, and more seriously, there are far easier problems for the UK to fix. We could seriously reform our planning system – not just set a few targets, which is all Labour has done so far – so that we can start building again. We could control public spending better, so that business taxes didn’t have to go up again. And we could start tackling the productivity crisis by reforming a public sector where output per person is falling year on year. 

Sure, closer trading relations with the EU might help a little. Even so, that won’t be easy given the fraught debate that led up to our departure, and the reluctance of anyone in Brussels to offer the UK any special deals. In reality, going back over the tortured debate over our departure from the EU is completely pointless – and Bailey is just making himself look ridiculous by indulging in it.