Global Economy Faces “Serious Consequences” from Trade Disruption

Bank of England Governor Andrew Bailey has warned of “very serious consequences for the global economy” due to the disruption of established trade patterns, largely attributed to Donald Trump’s policies. This global instability, he stated, is adding significant uncertainty to the future path of UK interest rates.
Bailey lamented that a long history of trade agreements leading to lower tariffs has been “blown up,” directly impacting world growth and activity. This uncertainty is causing UK businesses to delay investment, further complicating the economic outlook.
However, a key domestic factor that could influence interest rate decisions is the anticipated slowdown in UK wage growth. Bailey projected wage settlements to be around 3.7% to 3.8% by year-end, a development that could provide the Monetary Policy Committee with more room to maneuver.