Andrew Bailey, the Bank of England governor, has emphasized that the UK’s nature as a highly open economy means it is “more affected by the wider global picture,” particularly the uncertainty generated by Donald Trump’s trade policies, impacting future UK interest rates. He conveyed this to the Treasury select committee.
Bailey expressed concern that the long-established system of trade agreements leading to a lowering of tariffs has been “blown up” to a considerable degree, with “very serious consequences for the global economy.” This disruption is causing businesses in the UK to delay investment.
Nevertheless, the governor still anticipates a decline in UK wage growth in the coming months, which could provide the Monetary Policy Committee with more confidence to cut rates. He projected wage settlements to be around 3.7% to 3.8% by the end of the year.
Bank Governor: Open Economy UK More Affected by Global Trade Picture
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