Trump turmoil will have a ‘chilling effect’ on UK growth, says deputy Bank of England governor

By JOHN-PAUL FORD ROJAS

Updated: 22:06 BST, 10 April 2025

Donald Trump’s trade war will have a ‘chilling effect’ on UK growth, a leading Bank of England official has warned.

As market carnage showed little sign of abating yesterday, Sarah Breeden, deputy governor at the Bank, said that ‘overall, tariffs are likely to lower UK growth’.

The comments came as Wall Street markets sold off again, giving up much of the gains they had enjoyed a day earlier when Trump announced a 90-day suspension of his plans in relation to most countries.

Markets on this side of the Atlantic followed up yesterday with London’s FTSE 100 surging by 3 per cent, Germany’s Dax surging 4.5 per cent and France’s Cac 40 adding 3.8 per cent. 

But as traders weighed up the prospect of more uncertainty and a possible recession to come – with US tariffs of more than 100 per cent on China still going ahead – the mood later turned sour on Wall Street.

The Dow Jones tumbled by 2.5 per cent, the S&P 500 slid nearly 3 per cent and the tech-heavy Nasdaq lost close to 4 per cent.

Warning: Sarah Breeden, deputy governor at the Bank of England (pictured), said that ‘overall, tariffs are likely to lower UK growth’

And Breeden made clear that Britain still faces a major hit.

‘If nothing else, the chilling effect of trade policy uncertainty on firms and consumers is clear,’ she said during an online event yesterday. ‘I would expect tariffs to lower economic activity as barriers to trade inherently weigh on global demand.’

It is the third warning from the Bank this week about the impact of tariffs.

Clare Lombardelli, another deputy governor, had previously said they were ‘likely to depress activity’. And officials on the Bank’s financial policy committee have warned that the trade war had left the world more vulnerable to a financial crisis.

Trump’s climbdown on tariffs on Wednesday came after a bond market sell-off that saw US borrowing costs surge and pushed yields on 30-year UK bonds to the highest level since 1998. 

Bond markets were partly reassured by the 90-day pause but US yields were climbing again last night while the dollar weakened.

UK borrowing costs fell, however, with yields on benchmark ten-year UK bonds dipping sharply from just below 4.8 per cent to just over 4.6 per cent and 30-year yields also down from their peaks.

The Bank yesterday responded to the recent moves by suspending the sale of £600million of long-dated government bonds that had been due to take place next Monday ‘in light of recent market volatility’

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Trump turmoil will have a ‘chilling effect’ on UK growth, says deputy Bank of England governor

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