Bank of England warns of risks from rise in global trade barriers

The Bank of England warned on Friday that higher trade barriers could hit global growth and feed uncertainty about inflation, potentially causing volatility in financial markets and pushing up borrowing costs for businesses and consumers.

Without specifically referring to the victory of Donald Trump in the U.S. presidential election, the BoE said the financial system could also be impacted by disruption to cross-border capital flows and a reduced ability to diversify risk.

"A reduction in the degree of international policy cooperation could hinder progress by authorities in improving the resilience of the financial system and its ability to absorb future shocks," the BoE said in a half-yearly report on the financial system.

Asked at a press conference about the likely impact of a second Trump presidency, Bailey repeated his stance that he wanted to see the policies the Trump administration will pursue.

"We are seeing increased risk of global fragmentation. But I would say this, that there are quite a lot of causes of that and I don't think it's right to pin it on one particular event."

While U.K. households, businesses and banks appeared to be in good shape, the BoE report said, Britain's financial sector faced risks that were "particularly relevant" given the openness of the U.K. economy.

Other threats included high levels of public debt in many economies around the world.

"Uncertainty around, and risks to, the outlook have increased," the report said.

Bailey pushed back against a complaint from new finance minister Rachel Reeves that British regulators had inadvertently damaged the economy by taking too tough a stance on risk-taking in the financial sector.

"Put simply, there is not a trade-off between financial stability and