Bank of England governor says risks to UK, global economy from trade wars ‘substantial’ – as it happened

Andrew Bailey says ‘essential that we don’t abandon multilateralism;’ European stock markets, euro rally after Germany announces fiscal ‘bazooka’

German stock markets are surging while the country’s borrowing costs have jumped.

Last night, the two parties likely the form the next coalition government, the CDU/CSU and SPD, agreed to overhaul borrowing rules to boost defence and infrastructure spending, in a bid to kick-start the lacklustre economy, the biggest in Europe.

Germany does have a very under-leveraged balance sheet as far as countries go, and anything it can do to spend and stimulate growth, the market would respond positively to.

It’s the combination of easier fiscal rules in Europe combined with [US] tariffs that may not be as long lasting as what the market was worried about yesterday.

The euro rose against the dollar in early Wednesday trading, building on the momentum gathered at the start of the week and reaching its highest level of the year. The dollar has been weakening across the board, with the index tracking its performance against a basket of major currencies down more than 4% since early February.

Traders have shifted from pricing in growth and inflationary pressures from Trump’s tariffs to anticipating a slowdown in the US economy as the country moves towards protectionism.

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