UK growth forecast cut over tariff uncertainty
Summary
The UK's economy is expected to grow slower than we thought before because of some issues with trade caused by US tariffs, according to an economic forecasting group. The forecast for this year has been lowered from 1.0% to 0.8%, and next year's forecast has been lowered from 1.6% to 0.9%.Key Facts
- The EY Item Club, a group that guesses how the economy will do, has lowered its growth prediction for the UK's economy.
- This year’s growth forecast is now 0.8%, which is smaller than the 1.0% they guessed before.
- The same group has also lowered the growth guess for 2026 from 1.6% to 0.9%.
- The US has recently put taxes on goods from the UK and other countries; these extra costs are causing problems for businesses and customers.
- Businesses might not spend as much money because everything is so uncertain right now.
- The International Monetary Fund, another group that looks at money stuff, also thinks the UK economy won't grow as much as they thought before.
- The US is a big customer for the UK, buying about 16% of the UK's goods that are sold to other countries.
- The group expects UK exports to drop a little in 2025 and 2026.
- However, it's not all bad news. The service sector in the UK is still expected to grow this year, and the Bank of England might lower interest rates, which could encourage more spending.
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