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UPDATE 1-BoE's Bailey says Britain and EU should reach trade deal

Thu, 8th Oct 2020 07:46

(Adds detail from interview)

LONDON, Oct 8 (Reuters) - Bank of England Governor Andrew
Bailey said he believed Britain and the European Union should be
able to reach a trade deal, and that he did not expect the new
wave of coronavirus cases to be as damaging as the first.

"I do think it is in the interests of both sides - let's be
blunt - to get an agreement," he said in an interview with the
Yorkshire Post newspaper published on Thursday.

"I'm surprised that the EU wants to restrict where their
citizens can do business. We will certainly keep our markets
open to the world," he added.

Britain's Brexit supremo Michael Gove told parliament on
Wednesday that he saw a two in three chance that the two sides
would reach a deal before post-Brexit transition arrangements
expire at the end of this year.

Bailey reiterated that while he would like to see Britain
and the EU retain equivalent standards in financial services
regulation, it would be wrong for Britain to continue to follow
EU rules it had no control over.

Bailey also said that the rising number of coronavirus cases
in Britain was likely to hurt the economy, though less badly as
the initial surge earlier this year, which led to a 20% fall in
output in the three months to June.

"There will be a degree of natural caution," he said, adding
that the BoE remained ready to take more action if needed.

"The policy tools will be used to the fullest extent
possible to support the businesses and people of this country,"
he said.

Some sectors of the economy, such as hospitality, were
likely to come under greater pressure, as new government job
support were less suited to businesses where there was not an
immediate prospect of demand returning.

"We've got to face up to the question of how long the
economy can go on for before some degree of structural change
has to happen. It's a hard one," he said.
(Reporting by David Milliken; Editing by Alistair Smout/Guy

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