Governor Andrew Bailey said there is a ‘major shift going on in the US’ which the Bank would have to ‘take very seriously’
Bank of England’s Governor Andrew Bailey has raised concerns about the “substantial” risks that recent US trade policies may pose to both the UK and the global economy.
Addressing MPs on Wednesday, he pointed out a “major shift going on in the US”, which the Bank needs to “take very seriously” especially in the context of new tariffs imposed by President Donald Trump. Earlier this week, Trump escalated his assertive trade stance by slapping Canada and Mexico with 25% import tariffs.
The Trump administration justifies these steep tariffs as a means to secure an advantage over both allies and rivals internationally. However, experts are sounding alarms that such trade barriers could damage not only the American economy but also other nations’ economies, including the UK’s.
Speaking to the Treasury Select Committee, Bailey observed: “The risks to the UK economy and the world economy are substantial,” and stressed that “Trade supports growth.”
When probed about the potential for US trade policy to result in reduced disposable income for UK citizens, he confirmed: “Yes, that’s right… We serve the people, and we have to take it very seriously.”
Economic predictions indicate that the tariffs could incite inflation and price hikes in the US, possibly leading to increased interest rates. Likewise, the National Institute of Economic and Social Research (NIESR) has recently forecasted subdued economic growth for the UK due to rising global interest rates.
Mr Bailey has separately voiced concerns about the risks associated with the US potentially withdrawing from key global financial institutions like the International Monetary Fund (IMF) and the World Bank. These organisations play a crucial role in managing the global economy, offering financial support to countries to protect against economic downturns.
However, growing unease stems from suggestions that the US might disengage or exit these institutions entirely, especially after some of President Trump’s allies and significant White House staff have previously advised pulling out. Mr Bailey described such a move as a “very damaging thing for the world”.
But he said he was encouraged after hearing that the new US treasury secretary, Scott Bessent, “believes in multi-lateralism, and I strongly welcome that”.
