The UK can strike a US trade deal with Donald Trump while also rebuilding EU relations after Brexit to cement its status as a “beacon of stability” in an increasingly volatile world, a leading economist has said.

Andy Haldane, the former Bank of England chief economist, said Keir Starmer’s government could show the UK was “open for business at a time when so much else of the world is looking inward – whether to the EU, or the US, it could really pay dividends”.

After Trump’s election victory the prime minister has faced competing demands urging him to pick a side in trade talks with Washington and Brussels, just as he had begun a push to mend fences with Europe.

However, Haldane suggested the UK government could have both with a trade policy straddling the Atlantic. “I hope the government is in a position to really pat its head and rub its tummy at the moment,” he 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.”

The UK could only pursue a US deal and closer EU ties simultaneously after Brexit, he said. “It would have been impossible to have that conversation before. At least now we can commence that conversation. I’d really love if we could do something on both sides,” he added.

However, other experts have argued an incoming Trump administration gives Britain new impetus to move closer to the EU, and warned that the UK would face tough demands for a US trade deal that would be harder to bargain for alone.

On Monday, Starmer joined Emmanuel Macron in Paris for the French Armistice Day service, in a pointed show of European solidarity, amid growing alarm across global capitals over Trump reigniting trade conflicts worldwide.

Trump threatened during his election campaign to impose tariffs of up to 20% on all US goods imports, and up to 60% and 100% for China and Mexico, in a ramping-up of the protectionist policies of his first administration.

Haldane, who is now the chief executive of the Royal Society of Arts thinktank, warned this could reignite global inflationary pressures, generating a “downdraft” for Britain’s economy and driving up borrowing costs for UK households.

However, he said he was more broadly “very optimistic about the UK in general” because Britain appeared to be a relative safe haven on the world stage with a stable government that was committed to driving up investment in the economy.

“We could be a beneficiary of some of these uncertainties and fractures appearing elsewhere around the world,” he said.

The economist said Rachel Reeves’s budget had been “pro business” despite a “fixation on the extra taxes” from some bosses and the media because it stood as a downpayment on repairing battered public services and supporting growth-enhancing investment in infrastructure.

“Look, what were they [higher taxes] for? They were to pay for our creaking health services, our creaking transport system and our creaking education systems; they’re all things that businesses themselves as well as individuals need to work.

“You can’t have it both ways. If you want to build the right business environment you require investment in those things and that requires us to pay for those things,” he said.

Haldane was speaking to mark the launch of an “inclusive growth commission” he will chair on behalf of the directly elected Labour mayor of the East Midlands, Claire Ward. The commission, which also includes business and political leaders, will develop a local growth strategy and make recommendations for a £4bn funding pot across Derby and Derbyshire, Nottingham and Nottinghamshire.

Saying that the region had been “a bit in the shadows” in recent years, he argued the commission was an opportunity to “put the East Midlands on the map” to help secure investment from Westminster and international businesses.

“There is huge potential here to do something quite big and bold, to tell a different story,” he said.