Ex-Bank top economist Haldane says UK can strike Trump trade deal and boost EU ties

The Bank of England’s ex-chief economist has said Keir Starmer can simultaneously strike a trade deal with Donald Trump and rebuild relations with the EU to show the UK is “open for business”.

Andy Haldane said the prime minister’s new government could cement the UK’s status as a “beacon of stability” with a trade deal straddling both sides of the Atlantic.

Starmer has come under pressure since Trump’s election victory to choose between Washington and Brussels in trade talks.

Although Starmer has moved to boost ties with the EU after Brexit, he is facing the prospect of US tariffs that economists warn could hurt growth.

“I hope the government is in a position to really pat its head and rub its tummy at the moment,” Haldane told the Guardian.

“Of course we should pursue energetically an improved deal with the EU, although that won’t be straightforward. The new government committed to that and should keep on committing to that.

“That should not, though, preclude – and does not preclude, as difficult as it will be – seeking out a free trade arrangement with the US under a new Trump presidency.”

During the election campaign, Trump threatened to impose tariffs of at least 10 per cent on any foreign imports, rising to 60 per cent for Chinese imports and 100 per cent for Mexico.

Haldane warned this approach risked worsening global inflationary pressures, which could raise borrowing costs for British households.

After working at the BoE for 32 years and becoming one of its most prominent public figures, Haldane left in 2021 to become chief executive of think tank the Royal Society of Arts.

His comments come shortly after Goldman Sachs downgraded its growth forecasts for the UK and eurozone following Trump’s victory, citing “renewed trade tensions” that it expected to “weigh materially on growth”.

However, others have taken a more positive view. “Trump Derangement Syndrome is in full swing across Europe, including in the UK,” Simon French, chief economist at Panmure Gordon, said in a note on Tuesday.

He argued there were “far more material factors dictating the economic pathway” and that “colouring economic outcomes through an overtly political lens inevitably generates the wrong conclusions”.

French said that while commentary in recent days had focused on how a second Trump term might harm the UK economy, it could also lead to lower energy prices and allow Britain to “take advantage of competitive trade diversion”.