UK must seek to ‘rebuild’ trade relationship with EU, says Bank governor

The Governor of the Bank of England has said he hopes the UK can “rebuild” trade relationships with the EU after striking a trade deal with the US.

Andrew Bailey said it would be “beneficial” to reverse the post-Brexit reduction in UK-EU trade.

In an interview with the BBC, the Bank’s chief suggested that the UK-US trade deal secured on Thursday could set an example to nations around the world.

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.”

It came after President Donald Trump and Sir Keir Starmer confirmed a trade deal that would eliminate a number of planned tariffs between the nations.

As part of the agreement, US import taxes which had threatened to cripple British high-end carmakers were cut from 27.5% to 10%, while the 25% tariff on steel has also been removed entirely.

Meanwhile, the deal will also give America’s agricultural industry greater access to British markets.

“It demonstrates that trade deals are important,” Mr Bailey said.

“Trade deals can be done, and the trade is important… honestly, it seems an unpromising landscape at times,” he said.

“I hope that we can use these deals to rebuild the world trading system.”

The Government is currently in talks with the EU regarding its trade and security relationship, ahead of a summit later in May.

It comes after the Bank of England had warned earlier on Thursday that original US tariff plans on the UK would have knocked 0.3 percentage points off UK economic growth over the next three years.

The Bank also warned that the global economy was set to grow at a slower pace than previously expected due to heightened global trade tensions.

Meanwhile, the central bank reduced interest rates to a two-year low of 4.25% in the UK after a recent slowdown in inflation.