Andrew Bailey, governor of the Bank of England, expressed concerns over the UK’s weak growth environment while addressing global economic fragmentation at a Bruegel event. He noted that although disinflation is present, allowing for lower interest rates, uncertainty reigns due to a complex interplay of supply-side issues and rising inflation from administered prices, especially in energy and public services. He also highlighted that wage growth is not meeting expectations and predicted further slowdown. Furthermore, Bailey underlined that fragmentation adversely affects global growth, calling for a clear understanding of its implications on financial regulation and stability.
Bailey warned of a "weak growth environment" in the UK, affected by global economic fragmentation, despite disinflation trend allowing for lower interest rates.
The UK is experiencing heightened uncertainty with a weak growth outlook, compounded by supply-side weaknesses and short-run inflation increases primarily linked to administered prices.
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