The economy is, however, likely to adjust and find balance again in the longer term, Mr Bailey, who was speaking at the G30 40th annual International Banking Seminar on Saturday, added. The event in Washington, DC saw Mr Bailey highlight a decline in the UK’s potential growth rate from 2.5% to 1.5% over the past 15 years. He linked this to lower productivity growth, an ageing population and trade restrictions – including post-Brexit economic policies. “And the answer is that for the foreseeable future it is negative.”“But over the longer term, there will be – because trade adjusts – some at least partial rebalancing,” Mr Bailey added. Because that’s the Smithian growth model: making an economy less open restricts growth over the long term.
