The IMF has downgraded UK's 2025 GDP growth, citing the ongoing impact of Trump's tariff policies as a major threat to the economic outlook. In its latest World Economic Outlook report, the organisation warned that Trump's tariff policy could significantly hinder the nation's economic prospects.
As per IMF's latest estimates, the British economy is expected to witness a growth of 1.1%, down by 0.5 percentage points from the previous forecast that was issued earlier this year. As for the next year, the IMF has slashed its estimates by 0.1 percentage points to 1.4%.
However, it is worth mentioning that the latest estimates do not account for developments made after April 4, including the 90-day pause on tariff impositions. The Trump administration had announced a baseline 10% tariff rate on UK imports despite the relatively balanced trade exchange of goods between the two countries.
The latest GDP growth estimates for 2025 “reflects a smaller carryover from 2024, the impact of recent tariff announcements, an increase in gilt yields and weaker private consumption amid higher inflation as a result of regulated prices and energy costs,” IMF stated in its World Economic Outlook report.
UK not alone in facing downgrades
In its latest outlook report, the international organisation has downgraded growth estimates for the broader economy, as well. The US saw a sharper downgrade, with its forecast falling nearly a full percentage point to 1.8%. Meanwhile, the IMF has cut global GDP growth prospects by half a percentage point, lowering the estimate from 3.3% to 2.8%.
“Rising uncertainty and tariffs are key drivers of the subdued growth in 2025,” the report read, however for UK, the growth outlook remains relatively strong next year. Spain was perhaps the only nation in the Euro Zone with a better-than-estimated GDP growth estimate.
The IMF report said that the country's growth level “contrasts with the sluggish dynamics elsewhere." As for the other European nations, the tariff policy might continue to weigh down the overall outlook.
