* BoE flags big rise in bond yields after Trump victory
* UK central bank also sees risk of further trade slowdown
* Disorderly Brexit would threaten UK and EU - BoE
* UK is 'investment banker for Europe' - Carney
(Adds detail from news conference and report)
By David Milliken and Huw Jones
LONDON, Nov 30 Donald Trump's victory in the
U.S. presidential election has increased the threats to the
world economy from higher interest rates and less trade, the
Bank of England said on Wednesday.
The BoE also pointed to potential dangers from rapid Chinese
credit growth or a disorganised British departure from the
European Union in a half-yearly assessment of risks to Britain's
BoE Governor Mark Carney highlighted a big rise in U.S.
market interest rates since Trump's victory, which the Bank
said could be a precursor to a destabilising sharp move higher
in global government borrowing costs from previous record lows.
Yields on U.S. 10-year government bonds - which
influence borrowing costs globally - are on track for their
biggest monthly rise since December 2009 following Trump's
unexpected victory on Nov. 8.
"The U.S. election has reinforced existing vulnerabilities,"
the central bank said in its report. "The rise in advanced
economy sovereign yields, coupled with risks of reduced global
trade, has reinforced the vulnerabilities associated with those
emerging market economies with high levels of debt."
Trump has said he wants to boost infrastructure spending and
cut taxes. This could boost U.S. economic growth but also raises
the prospect of higher U.S. government borrowing costs and
inflation globally when many economies are still struggling to
overcome the effects of the 2007-09 global financial crisis.
For rich economies, a rapid rise in bond yields from
near-zero levels could hurt bank lending and lead to market
instability, the BoE said.
Carney said any new protectionist U.S. trade policies could
throw "sand in the gears" of the global economy, with knock-on
effects for Britain.
Trump has said he will scrap a planned trade deal with Asian
economies to bolster U.S. job creation and suggested that he
could pull the United States out of the World Trade Organisation
if its rules stopped him renegotiating U.S. terms of trade.
"There is this possibility that the slowdown in the growth
in world trade, which we have seen over the past few years,
accelerates because of discrete policy initiatives potentially
from the world's largest economy," he told a news conference.
Aftershocks from Trump's election were far from the BoE's
Although Britain's economy has performed better than the BoE
had expected immediately after the Brexit referendum, the
central bank said some types of commercial real estate could be
overvalued, even after big price falls.
Britain's government expects to start two years of formal
talks to leave the EU after March, and Carney repeated his view
that a lack of clarity about its priorities could push banks to
move operations out of the country prematurely.
Securing a transitional agreement before the financial
services industry feels the full effect of Brexit would benefit
both Britain and businesses elsewhere in the EU, Carney said.
"It is important to recognise that the United Kingdom is
effectively the investment banker for Europe," he said,
explaining that most of the EU's corporate finance needs were
met by British-based firms.
"It's absolutely in the interest of the European Union that
there is an orderly transition and that there is continual
access to those services."
The BoE also saw other potential threats, including
"extraordinary" credit growth in China, Britain's large current
account deficit and long-standing worries about the health of
the banking system in euro zone countries such as Italy.
Separately, the BoE also released its annual bank stress
tests, which Royal Bank of Scotland failed, requiring it to
raise extra capital.
(Editing by William Schomberg and Catherine Evans)