Bank of England governor Andrew Bailey has acknowledged that the United States “has a point” in criticising global trade imbalances, lending support to concerns raised by the Trump administration as the UK grapples with the economic fallout of rising tariffs and geopolitical uncertainty.
Speaking at an event hosted by the Institute of International Finance in Washington, Bailey said the central bank was “working through” the potential economic implications of President Trump’s sweeping tariff measures ahead of the Bank’s next interest rate decision in May.
The governor’s comments came during a week of high-stakes meetings hosted by the International Monetary Fund (IMF), and marked his most conciliatory tone yet towards Trump-era grievances about global trade. Bailey said long-standing surpluses among major manufacturing exporters — particularly China — pose structural risks to the global economy.
“Scott Bessent [the US Treasury secretary] has a point,” Bailey said. “There are issues with the way the system is working which pose harder questions about how the system operates.”
He criticised China’s reliance on weak domestic demand and export-led manufacturing, arguing the model was “not sustainable forever”. Bailey, an economic historian by background, said that today’s global imbalances mirror the very problems the Bretton Woods institutions were designed to address in the aftermath of the Second World War.
“The original Bretton Woods design put the emphasis on adjustment on deficit countries,” he explained. “The US was at that point the world’s surplus country and now that has turned around. We have to get back to the point of symmetrical adjustment and responsibilities.”
His remarks follow an intervention by US Treasury Secretary Scott Bessent, who called on the IMF and World Bank to abandon their focus on climate change and diversity and return to “core macroeconomic work”. In a sharp critique, Bessent accused the IMF of being “Polyanna-ish” in its latest external sector report and said the institution was failing to confront China’s “globally distortive policies”.
While Bailey defended the multilateral system as essential to global stability, he agreed the IMF should focus on its primary mission. “It is important that there is a commitment to the multilateral institutions,” he said, adding, however, that “it is not the job of the IMF to police trade imbalances”.
The UK government has also signalled alignment with Washington on some trade issues. Chancellor Rachel Reeves, who is also in Washington for the IMF and World Bank spring meetings, said global imbalances “should be reduced” and expressed support for removing both tariff and non-tariff barriers in order to boost trade with the US.
“The world has changed, and we are in a new era of global trade,” Reeves said, adding that the UK will not lower domestic standards on food or vehicles in response to American demands, but remains open to broader cooperation on economic and security partnerships.
IMF managing director Kristalina Georgieva has attempted to strike a conciliatory tone in the face of mounting US pressure, urging surplus economies to adjust their policies and pledging to sharpen the IMF’s focus on addressing global economic imbalances.
However, fears remain that the Trump administration’s renewed scrutiny of multilateral institutions could lead to staff cuts or a downgrading of programmes focused on net-zero goals and gender equity—areas now in the White House’s firing line.
While Bailey welcomed the US’s continued membership in the IMF and World Bank, he said the current moment required serious reflection on how international financial institutions are structured and the role they play in preventing economic divergence. “Eighty years on from Bretton Woods, the system still works,” he said. “But there are challenges that need addressing to ensure it remains fit for purpose.”
Paul Jones
Harvard alumni and former New York Times journalist. Editor of Business Matters for over 15 years, the UKs largest business magazine. I am also head of Capital Business Media’s automotive division working for clients such as Red Bull Racing, Honda, Aston Martin and Infiniti.