UK economy will be among hardest hit by global trade war, IMF warns

Published

3 months ago

April 22, 2025

admin

Britain’s economy will be among the hardest hit by the global trade war and inflation is set to climb, the International Monetary Fund (IMF) has warned – as it slashed its UK growth forecast by a third.

In a sobering set of projections, the Washington-based organisation said it was grappling with “extremely high levels of policy uncertainty” – and the global economy would slow even if countries manage to negotiate a permanent reduction in tariffs from the US.

Echoing earlier warnings about the risks to the global financial system, the IMF said stock markets could fall even more sharply than they did in the aftermath of Donald Trump‘s “Liberation Day” tariffs announcement, when US and UK indices recorded some of their largest one-day falls since the pandemic.

It comes as Chancellor Rachel Reeves prepares to meet her US counterpart Scott Bessent at the IMF’s spring gathering in Washington this week.

She is hoping to negotiate a reduction to the 10% baseline tariff the US president has applied to all UK goods. Steel, aluminium and car exports face an additional 25% tariff.

Money latest: Trump’s ‘major loser’ attack on Fed chair sparks market alarm

HARD TO SEE A WIN FOR REEVES AHEAD

Gurpreet Narwan

Business and economics correspondent

@gurpreetnarwan

As long as the world’s two largest economies are at war with each other, there will be considerable spillovers. The US and China account for 43% of the global economy.

If demand in either nation slows, that has ripple effects across the world. Tariff or no tariff, exporters to those markets will be hurt.

If China redirects its goods elsewhere, that could hurt domestic industries – jobs could be at stake.
US and Chinese investors might hit pause on global projects and stock market devaluations could hurt consumer confidence. Things could unravel quickly.

Against that backdrop, it is difficult to say with any certainty what would happen to the UK but, even if we find a way to sweet talk our way out of tariffs, the dark clouds of the global economy are moving in every direction.

Britain is an open and highly trade-sensitive economy (we have a trade-to-GDP ratio of around 65%) and global spillovers will rain on us.

Then there are the spillovers from the financial markets. The IMF warned that rising government borrowing costs were weighing on economic growth.
While rising UK bond yields are, in part, a reflection of investor unease over the UK’s growth and inflation outlook, they also reflect anxiety over the US trajectory.

It’s worth bearing all of this in mind if Chancellor Rachel Reeves emerges from her trip to Washington with a deal.

The Treasury would no doubt celebrate the achievement. After all, a reduction in tariffs could make a big difference to some industries, especially our car manufacturers who are currently grappling with a 25% levy on goods to their largest export market. However, it would not solve our problems.

In fact, it would barely make a difference to our overall GDP. Back in 2020, the government estimated that a free trade deal with the US would boost the UK economy by just 0.16% over the next 15 years.

And overall GDP does matter. The chancellor desperately needs economic growth to support the country’s ailing public finances (when the economy grows, so do government tax receipts).

She will know better than most that the prize the US has to offer is comparatively small, so she should weigh up the costs of any deal carefully.

The IMF presented a range of forecasts in its latest World Economic Outlook. Its main case looked at the period up to 4 April, after Mr Trump announced sweeping tariffs on countries across the world, ratcheting up US protectionism to its highest level in a century.

If the president were to revert to this policy framework, global growth would fall from 3.3% last year to 2.8% this year, before recovering to 3% in 2026.

In January, the IMF was predicting a rate of 3.3% for both years.

Nearly all countries were hit with downgrades, with the US expected to grow by just 1.8% this year, a downgrade of 0.9 percentage points.

Mexico was downgraded by 1.7 percentage points, while China and Canada are forecast to slow by 0.6 percentage points and Japan by 0.5 percentage points.

The UK economy is expected to grow by just 1.1% this year, down 0.5 percentage points from the 1.6% the IMF was predicting in January. Growth picks up to 1.4% next year, still 0.1 percentage points lower than the January forecast.

Along with recent tariff announcements, the IMF blamed the UK’s poor performance on a rise in government borrowing costs, which has in part been triggered by growing unease among investors over the fate of the US economy.

When borrowing costs rise, the chancellor has to rein in public spending or raise taxes to meet her fiscal rules. That can weigh on economic growth.

It also pointed to problems in the domestic economy, mainly “weaker private consumption amid higher inflation as a result of regulated prices and energy costs”.

In a blow to the chancellor, the IMF warned that the UK would experience one of the largest upticks in inflation because of utility bill increases that took effect in April.

It upgraded its inflation forecast by 0.7 percentage points to 3.1% for 2025, taking it even higher above the Bank of England’s 2% target and deepening the dilemma for central bankers who are also grappling with weak growth.

Meanwhile, inflation in the US is likely to jump one percentage point higher than previously forecast to 3% in 2025 on the back of higher tariffs.

The IMF forecast period ended on 4 April. That was before the US president paused his reciprocal tariffs on countries across the world while ratcheting up levies on China.

In a worrying sign for finance ministers across the world, as they attempt to negotiate a deal with the US administration, the IMF said the global economy would slow just the same if Mr Trump were to make his temporary pause on reciprocal tariffs permanent.

That is because higher tariffs between the US and China, which together account for 43% of the global economy, would have spillover effects on the rest of the world that offset the benefits to individual countries.

“The gains from lower effective tariff rates for those countries that were previously subject to higher tariffs would now be offset by poorer growth outcomes in China and the United States – due to the escalating tariff rates – that would propagate through global supply chains,” the IMF said.

In response, Chancellor Rachel Reeves said:

“This forecast shows that the UK is still the fastest-growing European G7 country. The IMF have recognised that this government is delivering reform which will drive up long-term growth in the UK, through our plan for change.

“The report also clearly shows that the world has changed, which is why I will be in Washington this week defending British interests and making the case for free and fair trade.”

UK

Lionesses praised after winning Women’s Euros – with bus parade confirmed this week

Published

10 hours ago

July 27, 2025

admin

Lionesses praised after winning Women's Euros - with bus parade confirmed this week

England fans across the country have heaped praise on the team after winning Euro 2025, with a bus parade celebration set for Tuesday.

Sarina Wiegman’s Lionesses took home their second Euros trophy in consecutive tournaments after beating Spain 3-1 on penalties in the final.

Chloe Kelly scored the winning spot-kick following two huge saves from goalkeeper Hannah Hampton, after Alessia Russo scored an equaliser to send the game to a shootout.

As it happened: England beat Spain on penalties to retain title

After England win, it was announced that an open-top bus parade will be held in London on Tuesday along The Mall, which will start at 12.10pm.

The celebrations will culminate in a stage ceremony at the Queen Victoria Memorial in front of Buckingham Palace at approximately 12.30pm

Fans can attend for free, and Sky News will broadcast it live.

‘You’ve made the nation proud’ – Starmer

Prime Minister Sir Keir Starmer was among the millions congratulating the Lionesses, posting on social media to praise the champions

“What a team. What a game. What drama,” he said.

“You dug deep when it mattered most and you’ve made the nation proud. History makers.”

The roof almost came off the Manchester clubhouse where Ella Toone started her journey

Greg Milam

Chief North of England correspondent

@GregMilamSky

Nowhere was the roar for the Lionesses louder than in the Astley and Tyldesley Miners Welfare club on the outskirts of Manchester.

The club where a five-year-old Ella Toone started her journey to England stardom, like so many places across the country, hosted nail-biting, table-thumping and, ultimately, deafening watch parties.

The roof almost came off the clubhouse when Chloe Kelly’s winning penalty went in.

Red bucket hats emblazoned with Toone’s now-famous ‘Buzzing My Head Off’ catchphrase were thrown in the air.

“Absolutely ecstatic,” said Lorraine Warwick-Ellis, who runs the pathway development for women and girls at the club.

“I was very nervous, very worried about penalties but we did it in the end.”

The success of the Lionesses has driven a huge boom in the popularity of women’s and girls football in recent years. She hopes this win will have a similar effect.

“I hope it cements the girls who are already here, keeps them engaged, and I hope it brings more girls down who want to be footballers and see that it’s open for everybody.”

It had been a pretty sombre watch for much of the game after Spain took the lead – but it erupted into life after Alessia Russo’s equaliser.

The shootout was the usual emotional rollercoaster but young fans seem to have greater faith in the Lionesses.

Among the jubilant teenagers celebrating in the clubhouse were two who have followed Toone’s path to academies at professional clubs.

“It’s unbelievable, they’re amazing, Chloe Kelly, I just don’t know what to say about her,” said Natasha Greenhouse. “We knew if it went to penalties that they’d do it.”

Tamsin Gallagher said: “They’ve done it the hard way all the way through the Euros but we all believed in them. Come on England.”

The party in Manchester and around the country and only just begun.

Prince William and Princess Charlotte, who were in attendance at St Jakob-Park in Basel, added on social media: “What a game!

“Lionesses, you are the champions of Europe and we couldn’t be prouder of the whole team. Enjoy this moment England.”

King hails Lionesses… and calls for World Cup

In a post on the official Royal Family account on X, King Charles also sent his “most heartfelt congratulations on winning the Euros 2025” to the Lionesses.

“For more years than I care to remember, England fans have sung that famous chant ‘football’s coming home’,” he said.

“As you return home with the trophy you won at Wembley three years ago, it is a source of great pride that, through sporting skill and awesome teamwork, the Lionesses have made those words ring true.

“For this, you have my whole family’s warmest appreciation and admiration. More than that, though, you have shown through your example over past weeks that there are no setbacks so tough that defeat cannot be transformed into victory, even as the final whistle looms.”

The monarch ended his statement by saying “the next task is to bring home the World Cup in 2027 if you possibly can!”

Culture Secretary Lisa Nandy added: “What an absolutely extraordinary achievement by our Lionesses – once again they have made history and united the country with pride and joy.”

Reform UK’s Nigel Farage said “well done” to the team and “what an absolutely fantastic watch,” while Conservative leader Kemi Badenoch said: “What an achievement. What a team!”

UK

Man suffers cardiac arrest onboard boat trying to reach UK

Published

1 day ago

July 27, 2025

admin

Man suffers cardiac arrest onboard boat trying to reach UK

A man has died after suffering cardiac arrest onboard a boat attempting to reach the UK.

The vessel turned back towards Equihen beach on the French coast yesterday morning.

A nurse tried to resuscitate the man but was unsuccessful.

French authorities have now launched an investigation into the circumstances.

A spokesperson for Doctors Without Borders, also known as MSF, has criticised authorities on both sides of the Channel.

Jacob Burns said: “Yet again we have a tragedy in the Channel, that is the consequence of the deadly, costly and ineffective security policies implemented by the UK and France.”

Later on Saturday, a lifeboat carried migrants who have made the voyage into the Port of Dover.

Photographs showed them huddled under blankets and orange life jackets on board.

Provisional statistics from the Home Office suggest almost 24,000 people have arrived on small boats in the UK so far this year.

Towns and cities across the UK have seen protests in recent days, primarily outside hotels believed to be housing asylum seekers.

UK

Women’s Euros final: The Lionesses face Spain tonight – and they’re seeking revenge

Published

1 day ago

July 27, 2025

admin

Women's Euros final: The Lionesses face Spain tonight - and they're seeking revenge

Here the Lionesses are again. Another final. Another showdown with Spain.

All of a sudden, what was once so anticipated and longed for can start to seem expected rather than extraordinary.

What happened to the great underachievers of world football? They are now consistently among the final two going for glory.

No one is taking that for granted.

Especially not Leah Williamson, with the chance to retain the European Championship trophy lifted three years ago at Wembley.

“The opportunity of tomorrow and what’s on offer is the best thing in football,” the England captain said. “I think we don’t necessarily carry the weight of it and how much it means to people, but we’re aware of it because it means the same to us.”

So often they were only watching other nations making finals.

England’s first was the men winning the 1966 World Cup.

England v Spain: All you need to know

Then, with the rebirth of women’s football after bans and neglect, it was the Lionesses’ turn to make it to the finals – in 1984 and 2009.

And the Three Lions had to wait until 2021 to make it to a final, losing to Italy on penalties at Wembley.

It kickstarted an incredible run of five successive years of finals for England senior teams – with another men’s Euros final defeat in 2024.

The Lionesses have led the way, bringing football home by defeating Germany in the Euro 2022 final at Wembley.

They just missed out on going one better when reaching a first Women’s World Cup final a year later.

Now, in Basel, comes the chance for revenge against Spain – even though no one in the England camp is saying that, publicly at least, in Switzerland.

Especially knowing how challenging a task it is coming up again against Aitana Bonmati and Alexia Putella – the recent winners of football’s biggest individual honours.

But this is Spain’s first Euros final.

And there is some fear from the world champions at England’s grit and resolve to produce comebacks late in the quarter-finals and semi-finals – with 19-year-old Michelle Agyemang’s goals integral to the fightbacks.

Spain captain Irene Paredes reflected yesterday on how the Lionesses can flip a result late on.

But she was also discussing how their World Cup win was tarnished by the on-pitch kiss that led to former Spanish federation president Luis Rubiales being convicted of a sexual assault on striker Jenni Hermoso.

It sparked a wider clamour in Spain for improved rights and respect for women.

“Since then [2023] we took big steps forward,” Paredes said.

“I think this idea is disappearing from society. I still believe we have to continue opening doors… we’re a reference for boys and girls in society, but we still have things to do.”

It is a reminder that while tonight is about collecting silverware, both England and Spain know that emerging as champions can drive further growth in women’s football back home.

Amid it all, they’ll try to savour just what reaching a final means and how rare they are – until recently for English and Spanish women.