Speaking in Brussels, Andrew Bailey warned that fragmentation was «bad for global growth» during a time of uncertainty.
ADVERTISEMENTGlobal players must work together to solve economic imbalances rather than allowing disparities to drive them apart, said the Governor of the Bank of England on Tuesday.
“Where we have pressures caused by imbalances we have to get to the bottom of the economics of what’s causing those imbalances,” claimed Andrew Bailey.
He was speaking at an event organised by the think tank, Bruegel, in Belgium.
Organisations like the International Monetary Fund, Bailey added, have a “crucial role” to play in this respect.
“That’s the way we can begin to get these issues on the table” without fragmenting global partnerships, he explained.
The governor warned that the world is currently in a period of heightened uncertainty, meaning that collaboration is essential to support global growth.
Tariff risks
Bailey’s comments come as markets are contending with unpredictable trade announcements from US President Donald Trump.
After announcing a 10% levy on all imported Chinese goods, Washington is now developing custom tariffs for specific countries, which could be ready at the start of April.
Trump is notably intent on rebalancing the US’ trade deficit, which hit a record $1.2 trillion (€1.1tn) last year.
In the President’s eyes, the disparity between exports and imports is a sign of national economic weakness, although experts argue that this imbalance can partially be explained by the strength of the US dollar.
When the dollar is strong, imports are relatively cheap for US buyers and US exports are more expensive for international buyers.
While tariffs are negative for global growth, the inflationary consequences are less predictable – said Bailey.
They notably depend on trade redirection and potential retaliatory measures.
Price pressures
Honing in on the inflationary picture in the UK, Bailey noted that price pressures were easing and that the nation was facing a “weak growth environment”.
This led the Bank of England to cut rates by a quarter point to 4.5% earlier this month.
ADVERTISEMENTAt the same meeting, the bank also halved its 2025 growth forecasts, although upgraded its predictions for both 2026 and 2027.
The economy is now forecast to grow by 1.5% in both of those years, up from 1.25%.
The Office for National Statistics also confirmed on Tuesday that UK wages are growing in both the public and private sectors.
Average weekly earnings in the three months to December grew 5.9% year-on-year, up from 5.6% in the previous quarter.
ADVERTISEMENT“Pay growth went up, but actually not quite as much as we were expecting,” said Bailey, speaking at the Bruegel event.
The governor added that UK inflation is expected to pick up in the short term, but this is linked to regulated prices such as energy and water.
They therefore don’t point to the underlying health of the economy, he explained.
