UK must ‘do everything’ to rebuild trade with EU

The governor of the Bank of England has said the UK now needs to “rebuild” its trade relationship with the European Union and do “everything we can” to improve long-term trade, after Thursday’s US deal.

Andrew Bailey told the BBC that as a public official he did not take a view on Brexit, but that reversing the post-Brexit hit to UK-EU trade would be “beneficial”.

The government is currently in talks with the EU on its plan to reset its trade and security relationship ahead of a summit later this month.

The US deal has left space for the UK to pursue a veterinary agreement with the EU, including alignment on standards in order to lower post-Brexit red tape on food, farm and fish exports.

As part of a new agreement between the US and the UK, the White House agreed to reduce import taxes on a set number of British cars and allow some steel and aluminium into the country tariff-free.

But it will leave a 10% duty in place on most goods from the UK.

Pushed on what impact a closer relationship between the UK and the EU would have on the economy and inflation, Mr Bailey said: “It would be beneficial – having a more open economy to trade with the European Union. Because there has been a fall-off in goods trade with the EU over recent years.”

He added that it mattered because the EU is the UK’s largest trading partner.

“It is important we do everything we can to ensure that whatever decisions are taken on the Brexit front do not damage the long-term trade position. So I hope that we can use this to start to rebuild that relationship,” Mr Bailey said.

The governor also said that the UK’s deal-making across the world was setting an important example to other countries.

“It demonstrates that trade deals are important. Trade deals can be done, and the trade is important.

“Honestly, it seems an unpromising landscape at times. But I hope that we can use these deals to rebuild the world trading system,” he said.