Closer trading ties with the European Union would boost Britain's economic growth, the governor of the Bank of England has said, in a rare intervention in the Brexit debate.

Andrew Bailey told the BBC that while he does not take a position on Brexit itself, the answer to whether trading more openly with the UK's nearest neighbours would help growth was "yes, it would". His comments come as Prime Minister Andy Burnham prepares to set out options for a new relationship with the EU.

A summit on 20 November

Mr Burnham plans to use a UK-EU summit in Brussels on 20 November to launch a discussion about Britain's relationship with the bloc beyond the next election. New agreements expected at the summit would strip away border checks on food and drink and create a youth mobility scheme for people under 35.

The Prime Minister has said a new food and farming agreement with the EU would increase GDP by 0.4 per cent over time, equivalent to about £12 billion a year. The Treasury has not yet published the analysis behind that figure, saying it will be released "in due course".

After the rate rise

Bailey was speaking after the Bank's Monetary Policy Committee raised interest rates on Thursday 5 November by a quarter of a percentage point to 4 per cent, the first rise since August 2023. The committee voted 8-1, with Catherine Mann dissenting in favour of a larger half-point rise to 4.25 per cent.

The governor also warned that there could be further rate rises if the war in Iran continues and energy prices stay high, saying the probability of at least one more increase was "reasonably high".