Closer EU Trade: BOE's Bailey's Prescription For Post-Brexit Economic Recovery

Luna Greco

4 min read

Post on May 31, 2025

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The Current State of UK-EU Trade Relations Post-Brexit

Post-Brexit trade deals have created a new reality for UK-EU trade relations, marked by significant friction and limitations. The current arrangements, while aiming for frictionless trade, have fallen short of expectations. The impact of these new trade barriers has been keenly felt across various sectors. The agricultural sector, for example, faces increased export costs and reduced market access, while manufacturers struggle with supply chain disruptions and higher input prices. The services sector, a cornerstone of the UK economy, also faces significant challenges in accessing the EU market. These issues highlight the crucial need for a reassessment of the UK-EU trade relationship. Key issues include:

• Increased trade costs due to tariffs and non-tariff barriers: New customs procedures and tariffs have significantly increased the cost of trading goods between the UK and the EU.
• Reduced trade volume compared to pre-Brexit levels: Data shows a clear decline in the volume of trade between the UK and the EU since Brexit, impacting economic growth.
• Supply chain disruptions: The new trade barriers have created significant disruptions to supply chains, leading to shortages and delays.
• Loss of market access for certain UK businesses: Some UK businesses have lost preferential access to the EU market, hindering their growth and competitiveness. This impacts the overall UK-EU trade relationship.

BOE Governor Bailey's Proposed Solutions for Strengthening UK-EU Trade

Governor Bailey has consistently advocated for a more pragmatic approach to UK-EU trade relations, emphasizing the crucial role closer trade ties play in post-Brexit economic recovery. While he hasn't presented a single, comprehensive plan, his statements and reports consistently highlight the need for solutions. His recommendations often center on reducing bureaucratic obstacles and fostering greater regulatory cooperation. Specific suggestions often include:

• Reducing bureaucratic hurdles and streamlining customs procedures: Simplifying customs processes and reducing paperwork would significantly reduce the cost and time involved in trading goods.
• Seeking closer alignment with EU regulations in key sectors: Greater alignment on regulations would remove many of the non-tariff barriers currently hindering trade.
• Strengthening regulatory cooperation: Establishing joint regulatory bodies and mechanisms for resolving disputes could foster trust and reduce uncertainty.
• Investing in infrastructure to facilitate smoother trade flows: Improving border infrastructure and digital systems is essential for efficient trade flows. This is key to bolstering the UK economy.

Potential Benefits of Closer EU Trade for the UK Economy

Strengthened UK-EU trade relationships offer considerable potential benefits for the UK economy. Improved market access, reduced trade costs, and increased competition could boost economic growth and create jobs. The potential economic upswing could be significant:

• Increased export opportunities for UK businesses: Closer ties would open up new opportunities for UK businesses to export goods and services to the EU market.
• Lower prices for consumers due to increased competition: Increased competition from EU businesses could lead to lower prices for consumers.
• Reduced inflationary pressures: Increased trade could help to reduce inflationary pressures by increasing the supply of goods and services.
• Attracting foreign investment: A stronger and more predictable trading environment could attract more foreign investment into the UK.

Challenges and Obstacles to Achieving Closer EU Trade

Despite the potential benefits, achieving closer EU trade relations presents significant political and practical challenges. Lingering political tensions from Brexit negotiations and differing regulatory frameworks continue to pose obstacles. Key challenges include:

• Lingering political tensions between the UK and the EU: Political disagreements and mistrust could hinder progress on trade negotiations.
• Differing regulatory frameworks: Differences in regulations and standards could create barriers to trade, despite improved trade relations.
• Concerns about sovereignty: Some in the UK may express concerns about compromising national sovereignty through closer regulatory alignment.
• Negotiating new trade agreements: Negotiating new trade deals requires navigating complex political and economic considerations.

Conclusion: Closer EU Trade: A Vital Prescription for Post-Brexit UK Economic Recovery

The current state of UK-EU trade presents significant challenges to the UK's post-Brexit economic recovery. Governor Bailey's emphasis on closer trade ties highlights the crucial role that strengthened trade relationships play in mitigating these challenges. Closer alignment on regulations, streamlined customs procedures, and enhanced cooperation offer a pathway to unlocking significant economic benefits – increased export opportunities, lower consumer prices, and a more robust economy. While political and practical challenges remain, the potential rewards of closer EU trade make it a vital prescription for a healthier UK economic future. The future of the UK economy hinges on forging closer trade ties with the EU. Learn more about the specifics of post-Brexit trade deals and how you can advocate for a stronger economic future through closer EU trade.