The Bank of England governor Andrew Bailey has warned that the UK is facing a “weak growth environment.”
Speaking at an event held by think tank Bruegel in Belgium Bailey warned of the impact of “global fragmentation” of the world economy.
He said: “Today, we’re in a period of, frankly, heightened uncertainty – we all know what’s going on around us.”
Bailey said that there is continued disinflation in the economy as prices continue to cool which allowed for interest rates to be cut, he added, “Because we are facing a weak growth environment in the UK.
“It is quite hard to work out to what extent that weaker growth story is a result of supply-side weakness, or supply-and-demand-side weakness.
“The second thing is we are facing a short-run hump in inflation that’s going to go up … nearly all of that comes from administered prices, particularly in the energy market, water and some other public services.”
Bailey said in the latest data pay growth increased “not quite as much as we were expecting” and that wage growth is likely to slow down over the next year.
Bailey said, “Fragmentation is bad for global growth, and I do think we have to make that point clear.”
This comes as the US President Donald Trump administration as made policy changes which includes the threat of higher tariffs on goods imported to America.
He added, “we are facing a world where there is more push-back on regulation” for financial services and he stressed there is “no trade-off between financial stability and growth.”
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