The Organisation for Economic Co-operation and Development (OECD) has recently downgraded global economic growth projections, largely attributing this shift to tariffs imposed by US President Donald Trump. These tariffs have adversely affected major economies, including the UK, which is now expected to see a GDP increase of only 1.4% this year instead of the previously expected 1.7%. For the following year, the forecast dips further to 1.2%.
Chancellor Rachel Reeves faces continuing challenges as the UK GDP unexpectedly shrank in January. Despite this setback, she highlights that the UK is set to be “Europe’s fastest growing G7 economy over the coming years – second only to the US”. The OECD’s report underscores the evolving global landscape and indicates that increasing trade uncertainties are causing broader economic repercussions.
The OECD predicts a decline in global GDP growth from 3.2% in 2024 to 3% in 2026, driven by heightened trade barriers and ambiguity around tariff implementation. In the US, growth forecasts have been revised down to 2.2% for 2025 and 1.6% for 2026. Earlier expectations projected a higher GDP increase of 2.4% for this year and 3.1% for the next.
While the Eurozone is not immune to these downgrades, the impact is not as severe as initially anticipated. The report notes that European economies will face reduced direct effects from the tariffs although they will still be hindered by geopolitical and policy uncertainties, ultimately restraining growth further.
The OECD has downgraded global economic growth due to tariffs imposed by the US, predicting lower GDP rates for major economies including the UK. The UK GDP is projected to grow by only 1.4% this year and 1.2% next year. While US growth forecasts have also been revised down, the Eurozone is expected to be less impacted than initially thought, although uncertainties continue to restrain overall economic growth.
The OECD’s latest forecast reveals a concerning trend for global economic growth, primarily attributable to rising tariffs. Major economies, including the UK and US, are predicted to experience lower GDP growth rates, reflecting the fallout from increased trade barriers and uncertainty. Chancellor Reeves, while acknowledging the challenges, remains optimistic about the UK’s future economic growth relative to other G7 nations. The consistently downgrading of growth expectations highlights how interconnected and fragile the global economy has become due to tariff implications.
Original Source: news.sky.com
