The UK’s economy is set to be among the hardest hit in the global trade war, the International Monetary Fund (IMF) has said.
In it’s latest global outlook, the IMF cut its economic growth forecasts for 2025, blaming Trump’s ‘Liberation Day’ tariffs for a “significant slowdown.”
In a sobering set of revised projections, the organisation there were “extremely high levels of policy uncertainty” affecting the global economy, which it warned will slow even if countries negotiate tariff reductions with the US.
The body predicts the global economy will grow by 2.8% this year, down from the 3.3% it had previously forecast.
When it came to the UK, the IMF cut its growth forecast to 1.1%, down from 1.6%. The IMF also warned the UK will experience one of the biggest increases in inflation because of the rise in utility bills this month, Sky News reports.
But it was the US economy that was handed the biggest downgrade among advanced economies, with growth now expected to be 1.8% this year, down from the previous prediction of 2.7%.
Speaking at a press briefing, economist Pierre-Olivier Gourinchas said the “risks to the global economy have increase, and they’re firmly on the downside,” as a result of uncertainty around trade policy following Trump’s wide-ranging tariffs.
The only advanced economy to have its growth forecast upgraded was Spain. Its economy is now predicted to grow by 2.5%, up from 2.3%, growth sparked in part by reconstruction activity following last year’s disastrous floods.
Along with the impact of Trump’s tariffs, the IMF blamed the UK’s poor outlook on a rise in government borrowing costs, which has partly been caused by growing uncertainty among investors in US economy.
The IMG also highlighted problems in the UK’s domestic economy, mainly “weaker private consumption amid higher inflation as a result of regulated prices and energy costs”.
All of this means the IMF has predicted inflation of 3.1% for the UK, up by 0.7 percentage points and way above the 2% target the Bank of England has.
Looking at the global picture, the IMF said even if Trump were to reverse his tariffs the global slowing of economic growth would continue.