UK economic growth forecasts slashed due to Donald Trump's tariffs

City forecasters have significantly reduced UK growth forecasts in light of President Donald Trump's tariffs, which are anticipated to inflict substantial harm on the global economy.

European markets are experiencing a downturn today following the implementation of tariffs, indicating that economists and investors are bracing for profit losses, as reported by City AM.

New research conducted by polling firm Consensus Economics and the Financial Times provides a sobering perspective, with an average of ten forecasters predicting that the UK will experience a sluggish growth rate of 0.8 per cent this year. This figure is two-thirds of what was previously projected.

The Bank of England has predicted that the UK economy will grow by 0.75 per cent this year, while the Office for Budget Responsibility (OBR), the fiscal watchdog, anticipates a growth rate of one per cent.

Both central forecasts were made prior to Trump's Rose Garden speech in which he announced a list of tariffs to be imposed on major economies as well as uninhabited islands.

The US president's ten per cent tariff on all goods imports has unsettled analysts, who remain uncertain about its potential impact on UK inflation.

While markets predict that interest rates could drop below four per cent by the end of the year, economists at Capital Economics suggest that the Bank of England may maintain its stance.

"The uncertain influence on CPI inflation from the tariffs may mean the Bank can't conclude that the upside risks to inflation have faded," they remarked.

"Moreover, the extra uncertainty caused by tariffs more generally may mean the Bank is more inclined to wait and see how things develop."

A separate study conducted by the British Chambers of Commerce (BCC) highlighted how companies are grappling with increased costs resulting from national insurance tax hikes imposed by Chancellor Rachel Reeves.

The survey, incorporating responses from over 5,000 businesses, found that merely a fifth of the surveyed firms expanded their workforce in Q1, while a similar number reported a workforce reduction.