Trump tariffs hit UK harder than EU, forcing sharp growth forecast cut
Posted on April 25, 2025 |
The International Monetary Fund (IMF) has sharply reduced the UK's economic growth forecast due to the impact of Trump’s tariffs.
UK growth is now expected to be just 1.1% in 2025 (down 0.5%) and 1.4% in 2026 (down 0.1%).
The UK is projected to face a greater hit from U.S. tariffs than other European countries.
Increased borrowing costs, rising inflation, and high energy prices—partly from the Russia-Ukraine war—are driving the downturn.
Despite the cuts, the UK’s growth outlook for 2025 (1.1%) is still higher than the eurozone’s (0.9%) but lower than the U.S. and Canada.
The IMF slightly raised Britain’s long-term growth outlook for 2028 and 2029 by 0.1 percentage points.
A large upward revision in inflation forecasts is another key reason for the UK's downgrade.
The IMF noted that the UK and the U.S. stood out for the scale and direction of inflation-related changes.
High energy costs in the UK are weakening domestic demand more than in most of Europe.
The economic impact of Trump's trade policies is proving deeper and longer-lasting than initially expected in the UK.
