“Considerable Degree”: Global Trade System “Blown Up” by Policy Shifts

The global trading system has been “blown up to a considerable degree” by recent policy shifts, particularly under Donald Trump, with serious consequences for the global economy and increased uncertainty for UK interest rates, according to Bank of England Governor Andrew Bailey. He shared this assessment with MPs.
Bailey highlighted that this fragmentation is negatively impacting world growth and activity, and is already causing UK businesses to delay investment decisions. He stressed the vulnerability of the UK’s open economy to these wider global developments.
Despite these external challenges, Bailey maintains his expectation for a slowdown in UK wage growth in the coming months. This anticipated moderation in wage settlements is a key factor that could provide the Monetary Policy Committee with the confidence to implement further interest rate reductions.