Mark Carney has hit out at the current “hostile” environment for world trade, in a thinly veiled attack on Donald Trump.

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The governor of the Bank of England told an audience in Newcastle there were signs of damage to global economic activity as the US president targets trade imbalances – with China, the world’s second-largest economy, now firmly in his sights after tit-for-tat measures against the EU, Canada and Mexico.

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With less than 24 hours before the US is expected to impose tariffs on over $30bn (£22.6bn) of Chinese goods, Mr Carney said much of the disruption had, so far, been the result of “talk (and tweets)”.



File photo dated 15/02/17 of a worker inspecting rolls of steel. Massive US tariffs on EU steel imports came into force on Friday as Britain made it clear a trans-Atlantic trade war would be bad for both sides.




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But he warned: “There is a growing possibility that trade uncertainty could crystallise the longstanding risks of a snap back in long-term interest rates, increased risk aversion and a general tightening in global financial conditions.”

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In wide-ranging remarks he also gave a further hint that the Bank’s monetary policy committee (MPC) was on track to raise interest rates, as markets expect, in August.



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The governor said the economy was currently performing in line with forecasts after a temporary slowdown at the beginning of the year which was largely caused by bad weather.

Mr Carney – a Canadian – was also clearly supporting England’s bid to win the World Cup for the first time since 1966.

Spotted wearing a Three Lions lapel pin, he responded to a question on the economic impact of a potential England victory in the 15 July final by saying it would be an “unalloyed, unadulterated, absolute good”.



Harry Kane celebrates after England's victory over Colombia




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His speech was, however, focused on trade and he argued that central banks did not have the power to offset the effects of an all-out trade war – unlike after the UK’s vote to leave the EU.

“In a general trade war, it is unlikely that global financial conditions would prove as robust, or that monetary policy could be as supportive.”

He told the audience: “The hit to global and UK GDP (gross domestic product) would be substantially greater if everyone put up tariffs against everyone else.”

The pound lifted slightly against the dollar to $1.3250 on the governor’s remarks concerning the UK economy.

Dr Howard Archer, chief economic adviser to the EY ITEM Club, commented: “Very notable Carney says he is more confident that economy’s Q1 weakness was largely weather-related & he goes on to say economy largely evolving as forecast in May Quarterly Inflation Report.

“Fuels my belief BoE most likely to raise rates from 0.50% to 0.75% at Aug MPC meeting.”

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