Global Trade Tensions Will Slow World Growth, Says BOE Governor

Bank of England Governor Andrew Bailey has warned that rising global trade fragmentation will weigh on worldwide economic growth, according to Wall Street Journal, citing an interview Bailey gave on Tuesday.

"Fragmentation is bad for global growth," Bailey said during an interview with Brussels think-tank Bruegel.

The BOE recently slashed its forecast for UK growth this year to just 0.7%, citing potential tariffs on UK goods exported to the US, as well as the broader uncertainty stemming from President Trump's aggressive trade policies. Trump's recent announcement of significant tariffs on steel and aluminium imports, including those from the UK, has contributed to this heightened uncertainty.

While the negative impact on economic growth is clear, Bailey noted that the effect of these tariffs on inflation is less predictable. "The situation on inflation in a country that faces tariffs is ambiguous," he said. "You can't easily predict it in advance."The BOE's revised growth forecast highlights the significant economic risks associated with escalating global trade tensions. While the inflationary impact remains unclear, the negative implications for global economic expansion are already being felt.