That comes about through a range of channels. For example, greater competition encourages UK firms to operate more efficiently. Access to larger export markets enables them to take more advantage of economies of scale. And the ability to trade allows the UK to specialise in sectors where it has a competitive advantage. To the extent that leaving the single market or the customs union makes it harder to do business with the EU, that will reduce the economy’s productive capacity. (Equally if leaving the EU allows the other economies to trade with and invest more openly in the UK then these same channels are likely to support UK productivity). We don’t know whether these long-run channels are already in operation. But it is possible that they have been contributing to reinforce the continued weakness of productivity growth. 6  In the short run what we do know is that uncertainty about the eventual outcome of the Brexit negotiations, and perhaps the expectation that Brexit will lower economic growth over time, has been depressing business investment. Businesses are waiting for more clarity before embarking on new capital projects, and that reduces their productive capacity relative to what it could have been, as well as hampering resource re-allocation across the economy. We see this most clearly in business surveys. Brexit has consistently ranked at or near the top of the list of 7  the risks identified in the Deloitte survey of Chief Financial Officers.

Disclosure metrics force us to confront the question of where we are and where we want to be, and thereby drive different decisions today. Knowing that we will be publishing our next TCFD disclosure in less than 12 months creates discipline and urgency. That brings me to the management of climate risks. Last year we became the first central bank and supervisor to set out supervisory expectations for banks and insurers on the management of climate risks.2 And this year we wrote to CEOs with more guidance, putting in place a deadline for firms to meet our expectations by the end of 2021.3 Of course, this is no easy task. That is why we have worked closely with industry through the Climate Financial Risk Forum (CFRF) to publish a practical guide for firms so that they can implement changes.4  1  https://www.bankofengland.co.uk/prudential-regulation/publication/2020/climate-related-financial-disclosure-2019-20 https://www.bankofengland.co.uk/prudential-regulation/publication/2019/enhancing-banks-and-insurers-approaches-to-managing-thefinancial-risks-from-climate-change-ss 3 https://www.bankofengland.co.uk/prudential-regulation/letter/2020/managing-the-financial-risks-from-climate-change 4 https://www.fca.org.uk/transparency/climate-financial-risk-forum 2  3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  As a central bank we are not only concerned with resilience at a micro-level, but also at a macro-level. That is why in July 2019 we announced our plan to launch a climate stress test exercise.5 When the pandemic hit, we decided to postpone the exercise in light of strain on firms’ resources, and to ensure the ambitious scope of the exercise could be maintained. We have used the extra time to continue our work on the design of the exercise, and firms have been busy preparing for it.