The Bank of England revealed that global economic conditions could face difficult times following the election of Donald Trump as the new president of the United States. The BoE warned that higher interest rates and reduced trade as a result of Trump’s campaign promises will hurt the international market. The Governor of the Bank of England Mark Carney spoke during a biannual assessment of risks to the British financial system, from internal and external sources. Carney referenced the increase in US market interest rates following Trump’s victory. He asserted that the increased rates will increase global borrowing costs from the record lows they had been enjoying. Yields on US 10-year government bonds are expected to experience their largest monthly increase since the recession.
“The U.S. election has reinforced existing vulnerabilities,” the central bank report revealed. “The rise in advanced economy sovereign yields, coupled with risks of reduced global trade, has reinforced the vulnerabilities associated with those emerging market economies with high levels of debt.” Trump has vowed to renegotiate the US’s trade agreements, in order to boost job creation in the country. He also plans on investing in infrastructure, a move which may increase the country’s debt. Carney admonished that if the US makes gross adjustments to its international trade agreements it would have knock-on effects on Britain. “There is this possibility that the slowdown in the growth in world trade, which we have seen over the past few years, accelerates because of discrete policy initiatives potentially from the world’s largest economy,” Carney said at a news conference.