UK-US trade deal live: Bank of England boss urges Britain to strike EU deal after historic Trump agreement

The UK is “on course to put the inflation surge firmly behind us”, Andrew Bailey said, whilst warning that we must “learn the lessons from the difficulties we have faced”.

He said that there is now a “positive story to tell” as the economic effects of global shocks have faded, saying that inflation is now returning “sustainably to target”.

“It is testament to the strength and resilience of this framework that we can say we are on course to put the inflation surge firmly behind us”, he said.

But Mr Bailey warned against complacency, urging policymakers and forecasters to learn lessons from the instability.

“Our models, infrastructure and analytical frameworks were challenged by the sheer scale and unpredictability of the shocks that hit us. Underlying issues were revealed under the stress of these big unforeseeable events”, he said.

“We need no reminder that the global economic environment is likely to continue to be challenging – and less predictable – than it was in the past. So we need to adapt and develop to ensure that our processes are nimble and robust, and that our monetary policy decisions are communicated effectively, while ensuring that we continue to act methodically in response to inflationary pressures.”

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The world has been “very different” over the last five years as a result of “unprecedented global shocks”, Andrew Bailey told the Reykjavík economic conference.

Giving a speech on responding to global shocks, the governor of the Bank of England said the “largest pandemic in a century, the largest war in Europe since 1945, and now a trade war between the world’s two largest economies” have “created a very challenging environment for monetary policy”.

He added: “These are not small and simple disturbances to aggregate demand, and they come against a backdrop of low productivity growth and ageing populations.”

While it remains to be seen how recent changes to global trade policies will play out and what the effects on our economies will be, the effects of the pandemic and Russia’s brutal war on the Ukrainian people are fresh in our minds.

“Our economies have suffered, inflation has surged. These have been hard times for businesses and households, not least those on lower incomes.”

The Conservative response to Britain’s trade deal with the US has been mired in chaos.

Kemi Badenoch said Britain had been “shafted” in negotiations with Donald Trump, while shadow business secretary Andrew Griffith said the agreement would be “welcomed by exporting businesses”.

The chaos signals the unease in Tory ranks at having to stomach a Labour prime minister agreeing a deal which eluded successive Conservative prime ministers.

Ms Badenoch also opposed Sir Keir’s trade deal with India on Tuesday, with business secretary Jonathan Reynolds asking “who do they want us to trade and do business with”?

But it is not the first time members of Ms Badenoch’s shadow cabinet have publicly read from different scripts to their party leader, and is a sign of the lacking discipline in the Conservative operation as it seeks to rebuild itself in opposition.

Responding to the Governor of the Bank of England’s comments that the UK now needs to “rebuild” Britain’s trade relationship with the EU, Liberal Democrat Deputy Leader and Treasury Spokesperson Daisy Cooper said: “Andrew Bailey has today added his voice to what Liberal Democrats have been saying for years: that we urgently need to rebuild our trading relationship with our closest and most significant economic partners in Europe.”

“This isn’t about revisiting the past, it’s about boosting our economy and deepening cooperation for the future.

“Despite the Government’s US deal, Trump’s trade tariffs are still hitting key British industries and threatening the livelihoods of people across the UK.”

“The Government must embrace a pragmatic and ambitious approach to our relationship with the EU – cutting red tape and providing a vital boost for our businesses.”

Andrew Bailey told the BBC the deal would be “beneficial” to “rebuild” trade relationships with the EU, amid government talks with the EU to reset its trade and security relationship.

“It is important we do everything we can to ensure that whatever decisions are taken on the Brexit front do not damage the long-term trade position. So I hope that we can use this to start to rebuild that relationship,” he said.

Asked what impact a closer relationship between the UK and the EU would have on the economy and inflation, Mr Bailey said: “It would be beneficial. Having a more open economy to trade with the European Union. Because there has been a fall-off in goods trade with the EU over recent years.”

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The director general of UK Steel said the exact details of the UK-US trade agreement for the industry had not yet been revealed.

Gareth Stace told Times Radio: “The headline here is that we’re really pleased with Government’s negotiations ability to scrap that 25% tariff burden that we have suffered since March. But yes, we don’t know the details.

“We don’t know when this deal comes into force for steel, we don’t know what conditions we need to meet in order to remove the 25% tariff, and we don’t know, crucially also, if all steel producers that export to the US market will be included or excluded.

“There may be issues around ownership, around where the steel is made, and until we see those details, we don’t know whether this heavy burden will be lifted from us.”

Mr Stace said reports that British Steel was more likely to be nationalised after the deal “would be a good thing” on a temporary basis to drive investment across the sector.

Reports that the US will have a veto over Chinese investment in Britain as a result of the UK-US trade deal are “complete nonsense”, Darren Jones said.

The Telegraph reported that such a veto is part the deal, but Treasury minister Mr Jones told Times Radio: “This story on the front page of the Telegraph is complete nonsense. I mean, I’m at a bit of a loss as to know where it’s come from. I think it was a Conservative Party criticism.

“But as you said, we’ve not even published all of the documents yet, so I’m not quite sure how they were able to come up with that.

“I can be completely categorical with you there is no such thing as a veto on Chinese investment in this trade deal, this is not what this trade deal is about.

“It is a sectoral trade deal in relation to tariffs in key sectors, in the way that we’ve just been talking about. So I’d suggest the Conservative Party reads the documents and they maybe come back for a second go.”

The connections between the UK and the US are deeply personal for so many Brits. As a teenager, I spent long summers in New York with family. I went to study at Harvard as a young man. After graduating I practised as a lawyer in San Francisco.

The world has changed a lot since then. The 2008 global financial crisis marked the end of the era of hyper-globalisation. The coronavirus pandemic exposed the danger of unreliable supply chains.

Putin’s illegal invasion of Ukraine was not only an attack on the Ukrainian people, but also the international order established in the wake of the Second World War, which imposed an energy price shock on every home in Britain.

Read the full analysis from foreign secretary David Lammy here:

The UK-US trade agreement will provide greater market access for the beef industry, a leading food industry executive said.

Neil Shand, chief executive of the National Beef Association, said 13,000 tonnes of US and British beef would be eligible to export to either country as part of the agreement but added the industry “remains very nervous” about the current Government’s policies.

Asked what the UK would gain from the deal, he told Times Radio: “We have access to the US market. We had limited access – there’s a carryover of a WTO (World Trade Organisation) deal that the US had, that existed from pre-Brexit times, and we were allowed to send small amounts of beef to the US, but this will allow our market to grow as well.

“In volume terms, there is an argument that they have a bigger access or a larger quantity into our market. But in the overall scheme of things, 13,000 tonnes is not a huge amount of beef, if you consider last year we imported 241,000 tonnes.

“We’re not self-sufficient, and it is important that we are able to provide beef eating consumers with a product.”

Mr Shand said it was likely the US-imported beef would be used in the services industry instead of being sold on supermarket shelves, as leading retailers “are not going to break rank” on British beef agreements.