The Bank of England Governor, Andrew Bailey, has cautioned against the growing tide of populism and called for continued openness to global trade. In a speech delivered to central bankers and economists, Bailey emphasised that now is not the time to shut the world off from the advantages that international commerce can bring.
Bailey’s remarks come amidst a climate of increasing economic nationalism and anti-globalist sentiment in many parts of the world. The BoE chief acknowledged the frustrations that have fuelled the populist backlash, noting that the benefits of trade have not been evenly distributed. However, he argued that the solution lies not in protectionism, but in ensuring that the gains from globalisation are more fairly shared.
“It’s understandable that people feel left behind by the forces of trade and technological change,” Bailey said. “But closing ourselves off from the world is not the answer. We must find ways to harness the power of global markets to create prosperity that is widely felt, not just concentrated at the top.”
The BoE Governor pointed to the economic damage that could result from a retreat into isolationism, cautioning that it would undermine productivity, innovation, and living standards. He emphasised that open and rules-based international trade has been a key driver of growth and rising living standards over the past several decades.
Bailey’s comments echo similar warnings from other central bank chiefs and economic policymakers, who have voiced concerns about the potential consequences of a new era of protectionism. Many fear that a breakdown in global cooperation could hamper efforts to address pressing challenges, such as climate change and the COVID-19 pandemic, which require coordinated international action.
The BoE chief’s speech comes at a critical juncture, as governments around the world grapple with the economic fallout from the pandemic and the public’s growing frustration with the perceived inequities of the global system. Bailey’s message is a clear call for policymakers to resist the siren song of populism and instead focus on finding ways to ensure that the benefits of trade and globalisation are more evenly distributed.
“We must not allow the understandable anger of those who feel left behind to lead us down the path of isolation and conflict,” Bailey said. “The way forward is to double down on the policies and institutions that have lifted billions out of poverty, while finding new ways to support those who have been left behind.”