Officials must be 'alert' to mounting geopolitical risks - BoE's Bailey
By Abigail Townsend
Date: Tuesday 20 Jan 2026
(Sharecast News) - The governor of the Bank of England warned on Tuesday that officials must remain "very alert" to mounting geopolitical tensions.
Andrew Bailey was being quizzed by MPs on the Treasury Committee about the potential economic impact of escalating geopolitical disputes. Bailey declined to discuss specific issues such as Donald Trump's attempt to annexe Greenland in the face of widespread global opposition.
But he acknowledged: "The level of geopolitical uncertainty and the level of geopolitical issues is obviously a big consideration, because they can have financial stability consequences."
Both market and economic reactions had generally proved "more muted than we would have feared and expected", he noted. But Bailey added that he did not take this as a "point of assurance", arguing instead: "We have to be very alert to these things."
Bailey also reiterated his concerns about the US authorities opening a criminal investigation into Federal Reserve chair Jerome Powell. The row is allegedly over a Fed building renovation project, but Powell has hit back, claiming that the Trump administration wants to undermine the Fed's monetary policy independence.
Bailey told MPs there were substantial potential spillovers for Britain from any threat to the Fed's independence.
Both gold and silver prices have surged this week, as investors seek out safe haven assets as geopolitical tensions continue to ramp up.
In contrast, the FTSE 100 - which has put on 18% over the last year - has fallen back, closing in the end red on Monday and shedding 1% in early afternoon trading on Tuesday. Markets across mainland Europe were similarly lower.
Trump announced over the weekend that eight European countries, including the UK, would face 10% tariffs from 1 February, rising to 25% from the start of June, after they deployed troops to Greenland.
The European Union is considering imposing retaliatory levies, but the Keir Starmer has insisted a trade war is "in no one's interests".
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