When Ireland and Luxembourg saved Britain from Liz Truss

New European

3 days ago

To be fair he was, as all central bank governors tend to be, very diplomatic. There are imbalances in world trade, and Brexit was not a bad idea, because it was not purely an economic decision, that kind of thing. But after those necessary caveats, he delivered a perfectly balanced argument for why Trump and Farage are wrong. He gave it both barrels.
Andrew Bailey, the governor of the Bank of England, was due to give a speech in Dublin last year, but he had to drop out when the General Election was called, and maybe it is just as well he did. Because he has been back to give that speech this week – he used it to attack Trump and Brexit, remorselessly.
Rather like Mark Anthony he is, you understand, not criticising the assassins; they are honourable men. It is just that when it comes to the UK's membership of the EU and Trump's attack on free trade 'The good is oft interred with their bones'.
Or as the governor put it in Dublin: 'From Adam Smith onwards, it has broadly been accepted that trade supports specialisation and efficiency of production and it enables knowledge transfer, and these features support productivity and economic growth.' This is central banker talk for, 'a five-year-old knows more than Trump and the Brexiteers about trade'.
Bailey continued: 'It follows that if the level of trade is lowered by some action, it will have an effect to reduce productivity growth and thus overall growth. Just as tariffs, by increasing the cost, can reduce the scale of trade, the same goes for the type of non-tariff barrier that Brexit has created.'
Simply put, Trump's tariffs and Farage's Brexit are two sides of the same coin, and both are making their own countries poorer.
Thank you and good night, you might think. But there is more.
Without mentioning her by name, Bailey also pointed out that it was only with the cooperation of Ireland and Luxembourg that the Bank of England was able to rescue the UK's bond market from the imminent collapse caused by Liz Truss's 'mini budget'. Ouch! It seems cooperation with your friends and neighbours is a good thing. Best not mention this to Liz. She thinks Andrew Bailey is part of a global plot to do her down.
'I think powerfully,' continued the governor, 'that we should do all we can to minimise negative effects on trade.' And that while last week's reset with the EU was good news for both sides 'not enough has been done to facilitate trade in manufactured goods and in my view both sides should now be looking at what can be done'.
Bailey also wants more cooperation on financial and services trade too. 'The scale of investment needed requires access to global capital, supported by open financial markets. The alternative is fragmentation, which we have unfortunately seen in the global economy in recent years'.
I can only assume he means Brexit. 'As such,' he continued, 'there is merit in seeking to increase the openness of our financial markets by reducing non-tariff barriers.'
To which one can only add 'Let but the commons hear this testament' – or at least the Labour government, because the governor is speaking truth to power, and he is right to do so.
And let us be clear: for all his central bank diplomacy, the caveats and the careful language, Andrew Bailey went to Dublin not to praise Brexit but to bury it.