The waves from Donald Trump’s tariff upheaval continue to ripple through the global economy. The International Monetary Fund (IMF) has downgraded its forecasts for global growth to 2.8 per cent for this year and 3 per cent for 2026, down from previous estimates of 3.3 per cent for each year. The UK isn’t immune: the IMF expects British growth to come in at 1.1 per cent this year and 1.4 per cent next year. US growth, meanwhile, falls to 1.8 per cent followed by 1.7 per cent.
These cuts were widely expected, but they sharpen the focus on the costs of the current trade tensions. The downward pressure on demand is likely to reduce inflation risks that the Bank of England had worried were becoming sticky. Megan Greene, a member of the Bank’s Monetary Policy Committee, said today that tariffs ‘actually represent more of a disinflationary risk’.
Yet the IMF disagrees and suggests that inflation may, in fact, spike – particularly in the US.
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