Andrew Bailey told The Yorkshire Post that investment into the nation’s infrastructure in recent years had been weak and said supporting digital, transport and climate infrastructure would help the economy grow, provide certainty for the economy and increase capacity for business.
Speaking exclusively to this newspaper, Mr Bailey said: “We have had fairly weak investment in this country for some time now. Infrastructure is an important part of it as it increases the capacity to do business more easily. I think investment is a big part of the story.”
Mr Bailey said that economic recovery from the pandemic still had some distance to being fully realised but said that he did not anticipate any further increases in unemployment.
However the governor warned that inflation was likely to increase and said he had a “very delicate and challenging job” when it came to managing its longer-term impact on the economy.
With inflation currently running above the Bank of England’s target of two per cent, Mr Bailey said a huge amount of focus was currently being directed to bring it under control.
“Obviously I am concerned with inflation above target,” he said.
“Unfortunately, if you look at our last forecast, it is going to go higher I am afraid. As the Bank of England governor I would prefer it not be there. But we are in very unusual times and what I would say is we have to manage our way through these times.”
He added: “We are going to have a very delicate and challenging job on our hands so we have got to in a sense prevent the thing becoming permanently embedded because that would obviously be very damaging.”
With the pandemic having altered consumer behaviour, there is now Mr Bailey said increased strain on shipping, meaning that the economy had a “whole range of challenges that we are just going to have to deal with”.
“We have got some very big and unwanted price changes,” he said
“Now we would expect to see that revert because people want to go back to their more established patterns, and we are seeing that happening, but it still has quite a way to go. This has been an almost unprecedented set of events. They are not over yet, that we are learning. We have to manage our way through them, and we will do that.”
The Governor’s views come ahead of a host of major announcements from the Government due in the next few weeks - including the Budget, the three-year Comprehensive Spending Plan, the Integrated Rail Plan and the Levelling Up White Paper.
West Yorkshire mayor Tracy Brabin echoed Mr Bailey’s view on infrastructure and said the Government must invest in transport infrastructure, skills training and raising living standards if it wants to genuinely deliver on its levelling up promises.
She said: “We want to lift that anxiety about transport off the shoulders of the people of West Yorkshire, we want that London-style transport system but we also need the same access to skills, training and opportunities.”