Bank of England boss warns over ‘fragmenting’ world economy amid Trump tariffs

The Governor of the Bank of England has warned over “fragmenting” the world economy amid promises from Donald Trump that he will impose steep trade tariffs on other countries.

Speaking to MPs on Tuesday, Andrew Bailey said the UK should keep an “active dialogue” with the incoming US administration, following Mr Trump’s election win.

When asked about potential tariffs, Mr Bailey said: “I would be very clear, fragmenting the world economy is not a good thing.”

However, the governor added that he does not want to “jump to conclusions” on the effect of particular tariffs on UK policy.

“I don’t think we can make that judgment today because we literally do not know what their intentions are.”

20% tax

Mr Trump has repeatedly said he will levy a 20% tax on all imports, which economists have warned would hit UK economic growth.

Speaking to the Treasury Select Committee of MPs, Mr Bailey declined to pass judgment on what the effect of those policies could be until they were set in stone.

He said US policymaking does not have the “same tightness” to pre-election commitments as the UK, and that it is “important that we wait to see what the administration actually does”.

Mr Bailey said policymakers should therefore “be in an active dialogue with the Trump administration on those policies as they effect the UK”.