Bank of England Governor Andrew Bailey has stated that Donald Trump’s “on-off tariffs” are leading to delays and deferred investment decisions among UK businesses, contributing to the uncertainty surrounding future UK interest rates. He conveyed these concerns to the Treasury select committee.
Bailey lamented that the long-standing system 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.
Despite these external pressures, 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.