Mon, 28 Apr 2025

Mon, 28 Apr 2025 UK growth forecast cut over tariff uncertainty

Business and consumer confidence is expected to suffer from the disruption to trade, an economic forecaster says.

* The UK's economic growth forecast has been downgraded to 0.8% this year and 0.9% in 2026, due to trade disruption caused by US tariffs.
* Tariffs on aluminium, steel, and cars from the UK will reduce demand for goods and services and dampen business confidence.
* Business investment is predicted to be weaker as firms become more cautious amid "high levels of uncertainty" in global trade.
* The IMF has also cut its growth forecasts for the UK, predicting 1.1% growth this year, down from 1.6%.
* US tariffs will act as a drag on UK growth and may lead to a slowdown in economic activity from Q2 2025 to early 2026.
* UK exports are predicted to fall by around 0.5% in 2025 and 0.4% in 2026.
* Despite the downgraded forecast, EY still sees "grounds for optimism", with the service sector expected to grow this year and interest rate cuts boosting household and business spending.
* Inflation is predicted to rise above 3% in April but fall to 2.4% in 2026.
* The Bank of England is expected to cut interest rates to 3.75% by the end of this year and then reduce them to 3.5% in February 2026.
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