Story by Mitchell Labiak and Faisal Islam – Business reporter and economics editor, BBC News

The UK must “rebuild relations” with the EU “while respecting the decision of the British people” who voted to leave in 2016, the Bank of England’s governor will say later.

Andrew Bailey’s Mansion House speech to investors will mark some of his strongest comments yet on Brexit, saying one of its consequences has been weaker trade.

He has previously avoided commenting on the topic because of the Bank’s independence from Westminster politics.

“As a public official, I take no position on Brexit per se,” he will say. “But I do have to point out consequences.”

Mr Bailey will say the changed relationship with the EU has “weighed” on the economy.

“The impact on trade seems to be more in goods than services… But it underlines why we must be alert to and welcome opportunities to rebuild relations while respecting the decision of the British people.”

Mr Bailey will also say the UK should not focus “just on the effects of Brexit”, warning about the “broader fragmentation of the global economy”.

His Brexit comments go much further than he previously has on the topic. Last November, he said the decision had “led to a reduction in the openness of the UK economy”.

Assessing the impact of the UK’s decision to leave the EU on the economy has been tricky given the multiple economic shocks in recent years.

The Office for Budget Responsibility and other independent analysts estimate the economy is 4% smaller over the past 15 years as a result.

Goods trade, especially in food and farm exports, has been especially hit by the imposition of new trade barriers. Trade in services, such as banking, has done better than expected, however.

The government remains opposed to rejoining the EU, but Prime Minister Keir Starmer and some EU politicians have said there could be a better relationship.

Spain’s Finance Minister Carlos Cuerpo told the BBC: “We need to be positive here and optimistic that a better deal can be actually closed on that front.”

A UK government spokesperson said: “We are committed to resetting our relationship with our European partners… and improving our trade and investment relationship.”

Mr Bailey’s Mansion House address will come alongside a speech by Chancellor Rachel Reeves, who will talk about her plans to shake up the UK pension system in a bid for growth.

She wants council pension pots to be merged so they can make bigger investments to generate higher returns, a move criticised as risky by some.

“The UK has been regulating for risk, but not regulating for growth,” she will say.

The annual event comes as the government also faces criticism from businesses for holding back growth through tax raises, which Reeves has said are necessary to “properly fund” public services.

‘Bottom line’

Mr Bailey’s speech will go on to address the wider UK economy and its lack of growth.

“Bottom line, it’s not a good story,” he will say, describing how productivity has fallen since the 2008 economic crash and has not recovered since.

He will explain that the UK is not alone in having this problem, which he says also affects other parts of Europe, but notes that the US has “a better story to tell”.

Mr Bailey will also echo Reeves’ concern that the UK pension system is “fragmented” and requires “heavy lifting” to fix it.

Former Chancellor Jeremy Hunt has said there was “much to welcome” in Reeves’ suggested reforms, though shadow chancellor Mel Stride has added that Conservatives will be “looking closely at the detail”.

By Uditha Jayasinghe and Sudipto Ganguly

COLOMBO (Reuters) -Sri Lankans handed Anura Kumara Dissanayake a thumping win in a snap general election, giving its new leftist president greater legislative power to pursue policies to alleviate poverty and fight graft as the country recovers from a financial meltdown.

Dissanayake, a political outsider in a country dominated by family parties for decades, comfortably won the island’s presidential election in September.

But his Marxist-leaning coalition, the National People’s Power (NPP), had just three of parliament’s 225 seats before Thursday’s election, prompting him to dissolve it and seek a fresh mandate.

The NPP won 107 seats, receiving almost 62% or 6.8 million votes in Thursday’s election, putting them past the majority mark in the parliament, latest results on the Election Commission of Sri Lanka’s website showed. A two-third majority appeared within reach of the coalition.

Sri Lanka’s President and National People’s Power (NPP) party leader Anura Kumara Dissanayake meets his party supporters after casting his vote on the day of the parliamentary election in Colombo, Sri Lanka, November 14, 2024. REUTERS/Thilina Kaluthotage
© Thomson Reuters

Voters directly elect 196 members to parliament from 22 constituencies under a proportional representation system. The remaining 29 seats will be allocated according to the island-wide proportional vote obtained by each party.

“We see this as a critical turning point for Sri Lanka. We expect a mandate to form a strong parliament, and we are confident the people will give us this mandate,” Dissanayake said after casting his vote on Thursday.

“There is a change in Sri Lanka’s political culture that started in September, which must continue.”

Celebrations were largely muted, with the exception of a few NPP loyalists who lit fireworks in the outskirts of the capital, Colombo.

Just over 17 million Sri Lankans were eligible to elect lawmakers for a five-year term. A record 690 political parties and independent groups were contesting across 22 electoral districts.

An election official holding a ballot box gets off the bus outside a vote counting centre after the voting ended for the parliamentary election in Colombo, Sri Lanka, November 14, 2024. REUTERS/Thilina Kaluthotage
© Thomson Reuters

Samagi Jana Balawegaya party of opposition leader Sajith Premadasa, the main challenger to Dissanayake’s coalition, won 28 seats and about 18% of the votes polled. The New Democratic Front, backed by previous President Ranil Wickremesinghe, won just three seats.

An election official carries a ballot box next to security force personnel at a vote counting centre after the voting ended for the parliamentary election in Colombo, Sri Lanka, November 14, 2024. REUTERS/Thilina Kaluthotage
© Thomson Reuters

TENTATIVE ECONOMIC RECOVERY

Sri Lanka typically backs the president’s party in general elections, especially if voting is held soon after a presidential vote.

The president wields executive power but Dissanayake still requires a parliamentary majority to appoint a fully-fledged cabinet and deliver on key promises to cut taxes, support local businesses, and fight poverty.

He also has plans to abolish Sri Lanka’s contentious executive presidency but requires a two-third majority in parliament to implement it.

A nation of 22 million, Sri Lanka was crushed by a 2022 economic crisis triggered by a severe shortage of foreign currency that pushed it into a sovereign default and caused its economy to shrink by 7.3% in 2022 and 2.3% last year.

An election official carries a ballot box next to police officers at a counting center, after voting ended for the parliamentary election in Colombo, Sri Lanka, November 14, 2024. REUTERS/Thilina Kaluthotage
© Thomson Reuters

Boosted by a $2.9 billion bailout programme from the International Monetary Fund (IMF), the economy has begun a tentative recovery, but the high cost of living is still a critical issue for many, especially the poor.

Dissanayake also aims to tweak targets set by the IMF to rein in income tax and free up funds to invest in welfare for the millions hit hardest by the crisis.

But investors worry his desire to revisit the terms of the IMF bailout could delay future disbursements, making it harder for Sri Lanka to hit a key primary surplus target of 2.3% of GDP in 2025 set by the IMF.

Autonomy: FG, govs, LG chairs sign implementation agreement

The Committee on Local Government Autonomy set up by the Federal Government has concluded its meetings and signed the technical document, which is expected to be transmitted to President Bola Tinubu soon.

The National President of the National Union of Local Government Employees, Hakeem Ambali, made this known in an interview with our correspondent on Tuesday.

In May, the Federal Government, represented by the Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, filed a lawsuit to challenge the governors’ authority to receive and withhold federal allocations meant for Local Government Areas.

The suit sought to prevent state governors from unilaterally dissolving democratically elected local government councils and establishing caretaker committees.

The AGF argued that the constitution mandated a democratically elected local government system and did not allow alternative governance structures.

On July 11, 2024, the Supreme Court gave a landmark judgment affirming the financial autonomy of the 774 LGs in the country, noting that governors could no longer control funds meant for the councils.

The seven-member Supreme Court panel, led by Justice Garba Lawal, ruled that it was illegal and unconstitutional for governors to manage and withhold LG funds.

The apex court also directed the Accountant-General of the Federation to pay LG allocations directly to their accounts, as it declared the non-remittance of funds by the 36 states unconstitutional.

Also, on August 20, the Federal Government instituted a 10-member inter-ministerial committee to implement the Supreme Court’s ruling on local government autonomy.

The committee members include the Minister of Finance & Coordinating Minister of the Economy, Wale Edun; Attorney-General of the Federation & Minister of Justice, Lateef Fagbemi SAN; Minister of Budget & Economic Planning, Abubakar Bagudu; Accountant-General of the Federation; Oluwatoyin Madein and the Governor of the Central Bank of Nigeria, Olayemi Cardoso.

Others are the Permanent Secretary, Federal Ministry of Finance, Mrs Lydia Jafiya, the Chairman, Revenue Mobilisation Allocation & Fiscal Commission, Mohammed Shehu, and representatives of state governors and the local governments.

The committee’s primary goal is to ensure that local governments are granted full autonomy, allowing them to function effectively without interference from state governments.

Speaking to our correspondent on Tuesday, Ambali said, “The committee has held its final meeting and we have signed the technical document which will be transmitted to Mr President so by November end. It is expected that states will receive their allocations from FAAC. Also, I can tell you that the President is eager to receive that document. The committee worked within the time frame that was provided.”

Meanwhile, the National Union of Teachers has expressed fears about the capacity of LGs to pay the N70,000 new minimum wage to primary school teachers.

The NUT’s apprehension is hinged on the failure of the councils to implement the former N30,000 minimum wage.

Findings by our correspondent show that some LG workers in Nasarawa, Enugu, Zamfara, Borno, Yobe, and Kogi states, among others, have remained on the N18,000 minimum wage, which was approved in 2011.

However, the inability of the councils to implement the minimum wage has been blamed on the failure of the government to fully implement the LG autonomy.

Data obtained from the NUT revealed that teachers in LG primary schools were not paid the former minimum wage.

In Enugu State, for instance, LG workers were exempted from benefitting from the minimum wage though the state workers enjoyed the minimum wage salaries.

Also, Abia, Adamawa, Bauchi, Nasarawa, Kogi, Sokoto, Taraba, Yobe, Zamfara, Imo and Gombe States did not implement the old minimum wage for teachers at both state and local levels.

Confirming this, the General Secretary of the National Union of Teachers, Dr. Mike Ene said, “I can tell you that some states didn’t even implement the N18,000 minimum wage for teachers at the local level. Some governors refused to pay stating that the teachers are under the employment of the local governments.

“There should be no form of segregation when it comes to the implementation of the minimum wage. We all go to the same market. There is no specific market for local government workers. However, we commend all the governors who have come out to say that the minimum wage will be implemented across the board.

“Also, the NLC has vowed to shake the country by December should state governments fail to implement the minimum wage so I can tell you that the move by the NLC will force things into play.”

But NULGE president Ambali assured that the minimum wage would be implemented across the board when the LG autonomy commences.

“Over the years, governors have had one excuse and that is the fact that they always claimed that LGs are autonomous so they can’t negotiate minimum wage on behalf of LG workers. But the truth is that LGs were never autonomous during those periods.

“However, during the negotiation of the new minimum wage, the President brought in representatives of ALGON (Association of Local Government of Nigeria) to also negotiate and with the LG autonomy coming into play, that will be settled. The NLC has also given an ultimatum of December for all states as regards the payment of the minimum wage,” he added.