Bank of England Governor Andrew Bailey has cited reports from businesses “pausing investment” as a direct consequence of the uncertainty surrounding trade barriers, largely driven by Donald Trump’s policies. This business hesitancy, he explained, adds to the uncertainty around future UK interest rates.
Bailey lamented that the established pattern of trade agreements, which led to lower tariffs, has been “blown up” to a considerable degree, having “very serious consequences for the global economy.” This disruption directly impacts the UK as an open economy.
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.