The Mail and Express are wrong to say the Bank of England governor now backs Brexit

If you have been unlucky enough to have read the pro-Brexit press over the past few years, you may have formed a view of Bank of England governor Andrew Bailey as a treasonous Remainer trying to undermine the success of Brexit.

Now, that same pro-Brexit press is telling you that you have been mistaken all along. After Bailey’s interview with Prospect magazine, the very same people who once excoriated Bailey now claim he is a giant of the financial world who thinks Brexit has been a triumph which will lead the City of London to new heights of wealth and power.

“Brexit has helped the City, not harmed it despite ‘pretty dire’ warnings from economists and experts, says Bank of England governor Andrew Bailey,” read a Daily Mail headline. The same paper last year was asking, “What’s the point of our Bank of England governor and his £575,000 salary?”

The Daily Express, loyal to Brexit despite all the evidence, screamed: “Bank of England boss finally admits ‘Project Fear’ Brexit warnings were all wrong”. Its headlines about the governor this year have included “Andrew Bailey (£575K-a-year) wants us to suck it up while he tinkers with our lives”, “BoE’s Bailey has got it wrong again and again”, “Andrew Bailey is ‘out of his depth’”, “Andrew Bailey’s ‘shambolic’ performance exposed” and “Andrew Bailey ‘should quit’ after ‘losing his mind’”.

The remarkable volte-face comes after Bailey’s interview with Lionel Barber, a former editor of the Financial Times. The pundits seized on Bailey’s comments but without, it seems, reading the whole thing.

For a start, they seem to have missed the bit where Bailey spells out what Brexit means. He told Barber: “If you reduce the openness of an economy, in the short run it will have negative effects. It will have a negative effect on productivity, it will have a negative effect on growth. I’m afraid that you don’t need to take my word for it, you can go back to Adam Smith and David Ricardo. You know, that’s the point about openness.”

How that is a ringing endorsement of Brexit is rather difficult to see.

Then the governor goes on to say this: “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. Now, that’s not to say that I trivialise them, discount them, and ignore them… I remember saying the week after the referendum, you know, ‘this means we will have to work even harder to make sure we don’t become isolationist.’”

So, the Bank of England has had to work hard to offset the consequences of Brexit, which as a result have not been “as dire” as predicted. Again, hard to see the glowing praise for leaving the EU in that sentence.

It is fair however to say that Mr Bailey does see some opportunities from Brexit in the form of changing EU regulations for UK ones. Here is the crucial exchange from the Q&A:

Bailey: I think it has actually created opportunities. I think we have protected, and in a sense ensured, that much of the market and much of the industry remains here. And that’s been important. It’s been very important.

Barber: So, it’s not a slow puncture?

Bailey: I don’t think it is, no. I don’t think it is. But I think we have to keep working at it very hard. I mean, it’s been a very hard, very large amount of work, but it was necessary.

So, the Bank of England believes that some regulations that the EU introduced were not perfect for the UK and it is now taking advantage of the opportunity to reform them. But they have had to work like slaves to minimise the Brexit downsides, to “keep much of the industry here”.

Not really something that you would write on the side of a bus is it?

Perhaps the misty-eyed Brexit backing fantasists should have paid more attention to the bit where Bailey mentions the famous quote by the former chairman of the Federal Reserve, Alan Greenspan: “If you think you understood what I’ve just said, you obviously didn’t”

We will probably have to wait for Mr Bailey to retire before we find out what he really thinks – and maybe not even then.