Trump trade war could have ‘substantial’ impact on UK, says Bank of England boss

The U.K. economy would face “substantial” risks if the U.S. administration sparks a trade war by ending multilateralism, the Bank of England governor warned. 

Speaking to MPs on the Treasury Committee on Wednesday, Andrew Bailey said the ongoing trade disputes — with the U.S. slapping tariffs on Canada, China and Mexico, and the trio of countries responding in kind — is a “big episode” that Britain “has to take seriously.”

“There is a major shift going on … in the U.S. We have to address it, and we have to be prepared and I welcome what the government’s doing on that front,” Bailey said. 

“We can’t ignore it, frankly, at this point, because of the risks to the U.K. situation, to U.K. growth … the impact on inflation could be ambiguous, but the risks to the U.K. economy, and to indeed the world economy, are substantial.”

Bailey also warned against what he described as a “very damaging thing for the world” if President Donald Trump decided to pull the U.S. out of organizations like the World Bank and International Monetary Fund, after the administration began a review of the country’s membership of international fora. 

“If you think the world economy is somehow out of balance, the place to address those balances is in a multilateral forum, not by bilateral action,” Bailey said.