𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The governor of the Bank of England has said the central bank has “to be very alert” to the potential impact from heightened geopolitical tensions as President Donald Trump seeks to seize control of Greenland.

Andrew Bailey told MPs at Parliament’s Treasury Committee that the tensions would have consequences for global financial stability.

However, he highlighted that the Bank believes global financial markets have been “more muted” in response to Mr Trump’s plans and his threats to hit opposing countries with tariffs.

Earlier this week, the President said the UK and other countries pushing back would face 10% tariffs on all products from next month, with this to increase to 25% from June 1, until a deal is reached for Washington to purchase Greenland.

On Tuesday, Mr Bailey said: “The level of geopolitical uncertainty and geopolitical issues is a big consideration because they can have financial stability consequences.

“Let me put that in a bit of context in two respects. One, having said that, growth in the world economy was a lot more stable than we thought it would be.

“The second point is about financial markets and is a fairly similar point, that we worry considerably about how markets react to those things.

“Market reactions have actually been more muted than we would have feared and expected.

“Overriding those points, I take neither of those as a point of assurance. We have to be very alert to these things.”

Financial markets have been weaker so far this week as investors and traders digest Mr Trump’s tariff threats, which would cause further trade disruption.

The FTSE 100 Index dropped by around 120 points soon after opening on Tuesday, falling by 1.2% to 10,075 points.

This followed a 0.4% fall on Monday while Germany’s Dax and France’s Cac 40 also slid in value.