Andrew Bailey Criticizes Trump Tariffs, Signals Fragile Economic Recovery
LONDON, JUNE 7, 2025 — In one of the most candid assessments from a central bank head in recent times, Bank of England Governor Andrew Bailey declared that the international trade architecture has effectively been “blown up,” citing mounting unilateral tariff moves—chiefly from the United States—as the key factor unraveling decades of economic integration.
Speaking at the Global Markets Forum during London Tech Week, Bailey criticized the Trump administration’s aggressive tariff strategy and warned that protectionism is now a systemic risk, not merely a geopolitical nuisance.
Trade No Longer Rules-Based
“For the first time in decades, we are seeing a global trading system operating without foundational rules,” Bailey said. “This isn’t just a skirmish—it’s structural. The world economy is fragmenting in ways that are deeply concerning.”
Bailey’s remarks came just days after the OECD slashed global growth projections, attributing much of the decline to trade disruptions. His language echoed the mounting unease among economists and business leaders about the collapse of multilateral frameworks such as the World Trade Organization (WTO), which has been effectively sidelined as nations resort to tit-for-tat tariff policies.
Implications for the UK Economy
While the Bank of England has not changed its official policy stance yet, Bailey signaled that external shocks are clouding the UK’s growth outlook. Revised projections released on Friday show UK GDP growth forecasted at 1.1% in 2025, down from 1.4% earlier this year. Exports to the U.S. and EU—key trade partners—have been particularly weak due to increased regulatory friction and tariffs.
“There is no insulation from a breakdown in trade,” Bailey warned. “Even economies like the UK, which are not directly part of the tariff crossfire, are seeing ripple effects in investment, logistics, and inflation expectations.”
Policy Constraints and Market Caution
The BoE is walking a tightrope: inflation in the UK has moderated to 3.1% but remains above the central bank’s 2% target. However, weakening external demand and a fragile services sector mean that further rate hikes could do more harm than good.
Bailey did not signal any immediate rate change, but his tone was notably more dovish than in previous speeches. “We’re in an environment of uncertainty where monetary policy must remain agile,” he said, adding that global shocks now outweigh domestic factors in many forecasts.
Financial markets responded cautiously to Bailey’s speech. The pound edged down 0.3% against the dollar, while UK 10-year gilt yields slipped as investors priced in slower growth and lower inflation momentum.
A Fractured Global Order
Bailey’s critique of Trump’s trade policies puts him in line with several global counterparts, including the ECB’s Christine Lagarde and Japan’s Haruhiko Kuroda, who have also called for restoring multilateral cooperation.
However, with the U.S. currently in a politically charged environment ahead of the 2026 midterms—and both parties adopting increasingly protectionist rhetoric—the prospect of returning to a rules-based global trade order remains slim.
Conclusion
Governor Bailey’s stark warning serves as both diagnosis and caution. As geopolitical tensions disrupt trade, central banks may find their traditional playbooks ineffective. And if trade frameworks remain fractured, a new era of volatility, fragmentation, and diminished growth may be here to stay.