Bank of England governor Andrew Bailey said Wednesday that the trade war initiated by US President Donald Trump will impact global growth that could hit Britain even if the country avoids the heaviest tariffs.
“Fragmenting the world economy will be bad for growth,” Bailey told the Global Outlook Forum hosted by the Institute of International Finance in Washington.
Even if it avoids the heaviest tariffs, he said, “the UK’s a very open economy and therefore, it’s not just, obviously, the relationship between the US and the UK”.
“It’s obviously the relationship between the US, the UK, and the rest of the world that matters here,” Bailey said. “So when we do our modelling...we also have to take into consideration the effect on growth in the rest of the world.”
Already facing sluggish growth and persistent inflation, the UK is targeted by 10% tariffs on its exports to the US.
London is hoping that negotiations with Washington will lead to an agreement to avoid or reduce those tariffs.
“What we hear from the US administration is that they are keen to do a deal with the UK,” said UK Chancellor Rachel Reeves, who was also in Washington for International Monetary Fund meetings.
Bailey also stressed the importance of maintaining a commitment to the multilateral institutions such as the IMF and the World Bank, welcoming comments by US Treasury Secretary Scott Bessent, who reaffirmed the US commitment to both organisations.
“I’ve read Secretary Bessent’s speech and I was very frankly encouraged because I think it’s important that there is a commitment to the multilateral institutions,” he said.
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