Latest news with #AndrewBailey
Daily Mail
18 hours ago
- Business
- Daily Mail
HAMISH MCRAE: Rules are rules when it comes to trade... until all the major players ignore them
You cannot, Mr Bailey, get the toothpaste back into the tube. Last week the Governor of the Bank of England, Andrew Bailey, gave a speech to investment managers in Dublin on how important world trade was to global growth and how the system had to be reformed. So far, so good. But when you go through the detail it was all about trying to rebuild trading relations with Europe and how to make the so-called 'rules based' world trade system work better. And the problem there is that the world has changed. The UK will not go back to anything like a pre-Brexit relationship with Europe, and the US will not go back to a pre-Trump approach to global trade. The task for British political and financial leaders is to exploit the opportunities that have arisen, rather than hark back to a none-too-brilliant past. On Brexit, the Governor was careful to make the disclaimer that as a public servant he didn't take a position on it, but what he said had a clear spin. We had to 'minimise negative effects on trade' and that the changing relationship with Europe has 'weighed on the level of potential supply'. At least he didn't cite the Office for National Statistics' calculation that in the long run Brexit would cost 4 per cent of national output. On that figure I prefer the comment of one of his predecessors, Mervyn King, arguably the most notable UK economist of his generation: 'They can't possibly know that. They just make it up.' Nor did Bailey refer to the determined drive by Europe to make banks shift their business and people to EU centres, including Dublin. Instead it was all about trade in finance being 'a two-way street', failing to mention that the UK has a huge surplus on exports of financial services, or indeed that there were 678,000 jobs in the City of London at the end of 2023, some 30 per cent more than in 2016. Of course we need as good a relationship as possible with all trading partners, but we need to acknowledge that, insofar as the City has been successful post-Brexit, it is despite hostility from Europe. As the still bubbling row about transferring euro-derivatives clearing from London to the EU shows, realistically that hostility will continue. On world trade the Governor acknowledged that the system has come under too much strain 'and it is incorrect to dismiss those who argue for restrictions on trade as just wrong-headed'. And the blame for imposing that strain goes mainly to China, which as he noted, heavily subsidised key industries to help them dominate world markets. China imposed 5,400 'subsidy policies' between 2009 and 2022, two-thirds of the global total. He made the point, too, that it was reasonable for countries to seek security of supply, but suggested they do so by dealing with reliable partners rather than trying to bring production back home. These are sensible comments, in particular acknowledging that Donald Trump has a point and China has abused global trading rules. He notes the damage done to trade by Covid and Russia's invasion of Ukraine. He points out how important trade in services is, particularly for the UK. It's an interesting, thoughtful and conventional analysis, and maybe that is what we should expect from a central banker – but I fear it is a naive one. Why? Take Europe. There is a huge trading imbalance between the UK and EU. They sell far more goods to us than they buy, and we export more services to them. But they are not going to change their rules to increase their imports of services. Take China. It's not going to stop subsidising its industries for fear of getting ticked off by the World Trade Organization. As for the US, it has given up on the whole International Monetary Fund-WTO system, that's that. So instead we have to negotiate our way through a bilateral trading world. The UK has made a good start. There are lots of reasons to attack our Government's financial policies, but doing deals with the US, the world's largest economy, and India, soon to be the third largest, deserves to be welcomed. We seem to have a slightly better relationship with Europe, and I don't see why we shouldn't get on with China. Let's try to be nice, as Andrew Bailey was in Dublin, but let's be aware that the rules-based order is dead.
Yahoo
2 days ago
- Business
- Yahoo
Governor Andrew Bailey Speaks on Trade Wars
Bank of England Governor Andrew Bailey spoke on trade wars with Bloomberg's Francine Lacqua, at the Irish Association of Investment Managers Event in Dublin. He says there have been very big changes in core financial markets, shifting from a "bank dealer model" to a "non-bank model" and that the financial system has so far "stood up" to the changes.
Yahoo
2 days ago
- Business
- Yahoo
Bank of England governor urges deeper ties with EU to ‘minimise' Brexit impact
Andrew Bailey has urged the UK government to deepen ties with the EU, as he warned a breakdown in global trade would make it harder for the Bank of England to control inflation. In a speech in Dublin on Thursday, the Bank's governor said a stronger relationship between London and Brussels could 'minimise negative effects' of Brexit on trade. Calling for closer cooperation on financial services as a priority, Bailey said government efforts to reset relations with the EU were a 'welcome step forward' after the UK's formal departure from the 27-country bloc in 2020. Bailey said, as a civil servant, he took no position on Brexit, and he understood there could be other reasons why voters backed leaving the EU, but he said the evidence showed that the UK's changing trade relationship had 'weighed' on Britain's economy. 'This does not mean that Brexit is wrong, because there can be other reasons for it, but it does suggest, I think powerfully, that we should do all we can to minimise negative effects on trade,' he said. The Bank's governor has previously called for the UK to strike deeper ties with Brussels to strengthen the economy, ahead of a deal agreed between Keir Starmer and the EU's Ursula von der Leyen in London earlier this month. On a day of dramatic developments in Donald Trump's increasingly erratic international trade war, Bailey said tougher barriers to trade made the economy less efficient and could therefore stoke inflation. UK inflation jumped by more than expected in April, to 3.5% from 2.6% in March, after sharp rises in water bills, energy costs and council tax. The Bank of England targets 2% inflation. Bailey warned that simmering geopolitical tensions and the fragmentation of international trade suggested the lengthy, complex manufacturing supply chains of the past were unlikely to return. 'The inevitable conclusion is that we cannot assume the supply sides of our economies behave as efficiently as they did before Covid. And this was a substantial cause of the very difficult upsurge in inflation,' he said. 'Our jobs are much harder if we face more inflexible and uncertain supply side conditions in our economies, as we appear to do today.' His comments came as figures from the Office for National Statistics showed inflation in March rose at a faster pace for private and social renters than older households who own their homes outright, extending an intergenerational gap that has opened up since September 2023. Inflation was 3.6% for private renters in the year to March compared with 1.8% for 'outright owner-occupiers', the ONS said in its latest estimate of household living costs. Social rents have also jumped, pushing up the cost of living for renters in local authority and housing association homes by 3% in the year to March. Groups representing young people and renters said the figures provided further evidence of a cost of living gap between younger people and the many older people who had paid off their mortgages and were immune to rising rents and mortgage costs. Renters tend to be much younger than the average age of outright owners. According to government figures, the average age of a private renter is 41, and 53 years in the social rented sector. Mortgage payers, another group that are younger on average than outright owners, had an inflation rate of 2.8% in the year to March. Ben Twomey, chief executive of Generation Rent, said the figures were 'a sour reminder' of the high costs renters pay to have a roof over their head. 'Homes are the foundations of our lives, but renters across the country are at constant risk of losing their homes and even ending up homeless because of soaring costs that swallow up our earnings. 'News of private renters facing the highest household costs is a sour reminder of how much of a raw deal we are getting.'
South Wales Guardian
3 days ago
- Business
- South Wales Guardian
Bank of England head welcomes UK efforts with EU
Speaking in Dublin on Thursday, Andrew Bailey said in relation to Brexit 'that we should do all we can to minimise negative effects on trade'. With reference to the Windsor Framework, which he described as a 'welcome step forward', Mr Bailey said: 'So too are the initiatives of the current UK Government to rebuild trade between the UK and EU.' The Windsor Framework, agreed between the UK and the EU in 2023, amended the Northern Ireland Protocol and governs post-Brexit trading arrangements in the region. Last week, the Government announced a deal with the European bloc that gives UK tourists in Europe easier access to passport e-gates, and frees up trade with the continent for farmers and food producers because of alignment on veterinary and plant standards. It was also said that the UK and EU will work more closely together on defence and security, and will agree a 'youth experience scheme' allowing young British people to travel and work on the continent. Sir Keir Starmer said at the time the deal was announced that it is 'time to look forward, to move on from the stale old debates and political fights'. In an interview with the BBC earlier this month – before the deal was struck with the EU – Mr Bailey said that it would be 'beneficial' to reverse the post-Brexit reduction in UK-EU trade. He said: '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.'
Leader Live
3 days ago
- Business
- Leader Live
Bank of England head welcomes UK efforts with EU
Speaking in Dublin on Thursday, Andrew Bailey said in relation to Brexit 'that we should do all we can to minimise negative effects on trade'. With reference to the Windsor Framework, which he described as a 'welcome step forward', Mr Bailey said: 'So too are the initiatives of the current UK Government to rebuild trade between the UK and EU.' The Windsor Framework, agreed between the UK and the EU in 2023, amended the Northern Ireland Protocol and governs post-Brexit trading arrangements in the region. Last week, the Government announced a deal with the European bloc that gives UK tourists in Europe easier access to passport e-gates, and frees up trade with the continent for farmers and food producers because of alignment on veterinary and plant standards. It was also said that the UK and EU will work more closely together on defence and security, and will agree a 'youth experience scheme' allowing young British people to travel and work on the continent. Sir Keir Starmer said at the time the deal was announced that it is 'time to look forward, to move on from the stale old debates and political fights'. In an interview with the BBC earlier this month – before the deal was struck with the EU – Mr Bailey said that it would be 'beneficial' to reverse the post-Brexit reduction in UK-EU trade. He said: '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.'
