Bank of England governor Andrew Bailey has argued that Brexit "created opportunities" for the UK, admitting however it has had a negative short-term impact on the country.
In an interview with Prospect magazine, he noted that leaving the European Union has hit productivity and growth in the UK, but there is greater potential in long term, as the worst predictions for the split from the EU proved to be exaggerated.
Bailey said: "I think the post-Brexit landscape does give us opportunities. I have always said, not everything about EU regulation was best suited to any national circumstances. If you go back to the period after the referendum, there were pretty dire predictions about the consequences of Brexit for the financial services world, for the City of London. And I think so far, those effects have been smaller."
Bank of England's Andrew Bailey: 'We are much nearer the top' of the hiking cycle
The BoE governor also highlighted how geopolitics is currently more unstable, arguing that central banks need to be prepared for "what comes next". "There could be very large shocks that we do not know about at the moment."
Bailey's warning came in tandem with markets wobbling over fears that interest rates will stay higher for longer.
He, however, stuck by the central bank's rate-setting path, defending its stance about the concern over the risk of a sharp rise in unemployment following the withdrawal of the furlough scheme in 2021 as well as surging food prices.
Yet he noted the government also has a role to play in the fight against inflation: "In the short run, the response has to come from monetary policy. But in the medium to long term, it often involves a broader set of issues in terms of choices and policies that go beyond the Bank of England's responsibility."
