UK Growth Forecast Cut Further Amid Trump Tariffs

The UK’s economic growth forecasts have been sharply downgraded by the EY Item Club, with GDP now expected to grow just 0.8% in 2025 and 0.9% in 2026, largely due to sweeping US tariffs introduced by Donald Trump. The tariffs, which include a 10% baseline and 25% on key exports like cars, steel, and aluminum, are expected to directly reduce demand for British goods, which account for about 16% of UK exports to the US. Indirect effects include subdued household spending, weakened business investment, and plunging economic confidence, as businesses brace for supply chain disruptions by seeking new markets in Asia, Africa, and Australia. The International Monetary Fund has also cut the UK's growth outlook. Chancellor Rachel Reeves is under increased pressure to revise fiscal plans or consider higher taxes or spending cuts. The UK government and business groups are focused on negotiating a US trade deal rather than retaliating, as fears of a prolonged trade war grow.