Trump’s commerce conflict may hit Britain, warns Bank of England ratesetter

A Bank of England rate-setter has warned that Donald Trump’s trade war could hit growth and push up consumer prices in the UK. 

Catherine Mann, who sits on the Monetary Policy Committee deciding interest rates, said the splintering of the world economy would “likely put upward pressure on costs and prices”.

Her remarks at the Annual Conference of the Society of Professional Economists in London come as Mr Trump is poised to re-enter the White House in January on a mandate of cutting taxes by aggressively raising tariffs.  

Ms Mann said that even uncertainty more broadly about trade policy risked having “damaging economic effects and increase volatility”. 

She said: “The latest political developments across the Atlantic have not made a disorderly trade scenario less likely, which would have consequences for output and inflation in the UK.”

The rate-setter is known as the hawk-in-chief on the Bank of England’s nine-person panel setting interest rates, preferring higher borrowing costs when faced with uncertainty. 

Ms Mann said that factors like protectionism, climate change and higher government spending could trigger more unstable inflation in coming years. 

This will lead to higher interest rates in the long-term, she believes. 

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