UK businesses are pausing investment decisions, directly reacting to the unpredictable nature of Donald Trump’s trade policies, according to Bank of England Governor Andrew Bailey. This business hesitancy, he explained, is a key factor contributing to the increased uncertainty surrounding future UK interest rates.
Bailey emphasized that the “impact of fragmenting the world trading system is negative for world growth and world activity,” and that this global shift is directly affecting the UK. He expressed regret that a long-standing system of lower tariffs has been “blown up.”
Nevertheless, the governor still expects UK wage growth to decline in the coming months, which could provide the Monetary Policy Committee (MPC) with more confidence to cut rates. He projected wage settlements to be around 3.7% to 3.8% by the end of the year.
