Global economic growth has been downgraded by the Organisation for Economic Co-operation and Development (OECD) – as the impact of US President Donald Trump’s tariffs becomes apparent.

Major economies including the UK will have lower rates of GDP – a measure of an economy’s value and everything produced – due to the US’s imposition of taxes on some goods it imports, the Paris-based OECD club of 38 rich countries said.

The UK economy will grow only 1.4% this year, as opposed to the 1.7% previously anticipated.

Next year, the figure will be 1.2%, lower than the 1.3% forecast before Mr Trump took office in January, according to the OECD interim economic outlook.

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It’s more unwelcome news for Chancellor Rachel Reeves after January GDP unexpectedly shrank. The government has repeatedly said growing the economy is its number one priority.

In response to the OECD figures, Ms Reeves pointed out the UK is forecast to be “Europe’s fastest growing G7 economy over the coming years – second only to the US”.

“This report shows the world is changing, and increased global headwinds such as trade uncertainty are being felt across the board,” said the chancellor.

Global GDP will slow, the OECD said, from 3.2% in 2024 to 3.1% in 2025 and 3% in 2026 due to the higher trade barriers caused by the tariffs and the policy uncertainty around their implementation.

US growth has been revised downward to 2.2% in 2025 and 1.6% in 2026. Higher GDP of 2.4% and 3.1% had been expected for this year and next.

While the Eurozone has not escaped the downgrades it is less impacted than first thought, the report said.

“European economies will experience fewer direct economic effects from the tariff measures incorporated in the baseline projections, but heightened geopolitical and policy uncertainty is still likely to restrain growth,” it said.

What’s happening with tariffs?

After some false starts, where levies were announced and paused last minute or not brought into effect at all, tariffs are now in effect on some goods coming from China.

A 25% tariff on all steel and aluminium imports to the US came into effect earlier this month.

Tariffs on Canada and Mexico were suspended until 2 April.

The full effect of tariffs has also yet to be felt as EU retaliatory taxes on US goods are yet to take effect.

In response, Mr Trump said he would impose a 200% tariff on EU alcohol – including wine and champagne.

Read more:
What are Donald Trump’s tariffs – and how will they affect the UK?

Consumers to be hit

It’s consumers who will pay the price for the additional taxes, the OECD said.

“Consumers face much of the burden of higher tariffs,” it said, as it warned of a “significant” impact on living standards.

Thames Water has staved off effective government ownership after an unsuccessful legal challenge to its financial restructuring.

The Court of Appeal has ruled in favour of a £3bn loan intended to temporarily sort out its finances while the company raises more private investment, dismissing an appeal.

The decision backs the High Court judgment of last month and means the UK’s biggest water supplier is unlikely to be taken into special administration – a form of government control – in the coming days.

Without the loan, Thames Water said it would run out of money on 24 March.

The appeal was launched by Lib Dem MP Charlie Maynard and a small group of Thames Water creditors.

Those creditors had objected to the loan as they faced being wiped out completely in the financial restructuring.

The company is now struggling under a £19bn debt pile. It was unable to secure more investment from existing shareholders over the high fines it faced from regulator Ofwat for rule breaches.

Monday’s decision was met with dismay from campaigners and welcomed by Thames Water.

“As a vital public utility serving a quarter of the population, the Environment Secretary should be charting a course to safer waters by putting Thames into special administration and public ownership,” said Matthew Topham the lead campaigner for We Own It, which campaigns for public ownership of public services.

“Instead, Steve Reed has just flushed nearly £1bn of households’ cash down the drain in the form of interest payments and professional fees by supporting this terrible deal to go ahead.”

Thames Water chief executive Chris Weston said “We remain focused on putting Thames Water onto a more stable financial foundation as we seek a long-term solution to our financial resilience.”

“Today’s news demonstrates further progress.”

The first half of the £3bn will come through in “the coming months”, he added.

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A delivery driver who needed skin grafts after being burned when a hot tea from Starbucks spilled into his lap has been awarded $50m (£38.6m) in damages.

Michael Garcia suffered third-degree burns to his genitals, groin and inner thighs and has permanent and life-changing disfigurement after collecting the drink at a California drive-through, according to his legal team.

His negligence lawsuit blamed the injuries on Starbucks, claiming an employee did not wedge the scalding-hot tea firmly enough into a takeaway tray.

Video footage shows Mr Garcia being handed a tray of three drinks at the serving window in Los Angeles and appearing to struggle as he drives his vehicle away.

A Los Angeles County jury found in favour of Mr Garcia after he launched legal action over the incident on 8 February 2020.

He was working as a Postmates delivery driver at the time, according to Sky’s US partner network NBC News.

His lawyer Nick Rowley said his client’s “life has been forever changed”.

“This jury verdict is a critical step in holding Starbucks accountable for flagrant disregard for customer safety and failure to accept responsibility,” he added.

Starbucks said it sympathised with Mr Garcia, but plans to lodge an appeal.

In a statement, the global coffeehouse chain said: “We disagree with the jury’s decision that we were at fault for this incident and believe the damages awarded to be excessive.”

The firm added it was “committed to the highest safety standards” in handling hot drinks.

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US restaurants have faced lawsuits before over customer burns.

In one famous 1990s case, a New Mexico jury awarded a woman nearly $3m (£2.3m) in damages for burns she suffered while trying to pry the lid off a cup of coffee at a McDonald’s drive-through.

A judge later reduced the award and the case was settled for an undisclosed sum under $600,000 (£463,600).