UK recession hazard if Trump imposes Greenland tariffs on UK | UK | News | EUROtoday

Britain could possibly be plunged right into a recession if the US imposes recent tariffs on imports from nations keen to defend Greenland, economists have cautioned.

President Donald Trump has threatened to slap a ten per cent levy on items from the UK, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden beginning February 1, with the tariff set to leap to 25 per cent in June.

According to a report by Capital Economics, such a transfer may wipe as much as 0.75 per cent off the UK economic system, spelling hassle for British carmakers and the prescription drugs trade.

Paul Dales, chief UK economist at Capital Economics, warned: “With the UK economy currently growing by 0.2 per cent to 0.3 per cent a quarter, if this hit came all at once it could trigger a recession.”

However, he famous that the long-term political and geopolitical fallout could be much more vital.

UK lags behind US and Canada in progress forecasts

The stark warning comes because the International Monetary Fund (IMF) predicted that the UK economic system will proceed to path the US and Canada when it comes to progress this 12 months and subsequent.

The projections, outlined within the IMF’s newest World Economic Outlook report, counsel that Prime Minister Keir Starmer and Chancellor Rachel Reeves are struggling to ship on their pledge to make Britain the fastest-growing economic system within the G7.

While the UK is predicted to broaden by 1.3 per cent this 12 months and 1.5 per cent in 2027, the IMF forecasts progress of two.4 per cent and a couple of per cent for the US, and 1.6 per cent and 1.9 per cent for Canada over the identical interval.

Chancellor Reeves hailed the IMF’s prediction that the UK will outperform different main European economies within the subsequent two years, however shadow chancellor Mel Stride accused her of “gaslighting” the nation.

Stride argued: “The fact Rachel Reeves is celebrating it shows how desperate she has become. The economy is flatlining. Gaslighting the country won’t fix the economy – only a serious plan to lower taxes and control welfare will.”

Consumer confidence hits nine-month low

In one other blow to the UK economic system, S&P Global reported that its “consumer sentiment index,” a vital gauge of family confidence, has dropped to a nine-month low in the beginning of the 12 months, marking the fourth consecutive month-to-month decline.

Maryam Baluch, an economist at S&P Global, mentioned the information for early 2026 “painted a persistently downbeat picture among UK households,” with client confidence weakening additional and households’ present monetary well-being deteriorating sharply.

Baluch added: “Concerningly, labour market expectations have deteriorated. Households reported income growth from employment slowing to its weakest pace in ten months, coupled with rising concerns over job security.

“This job market uncertainty prompted households to keep up a cautious stance on discretionary spending. However, financial savings however continued to come back beneath stress, with some households slipping into deficit to handle elevated residing prices and counting on loans to bridge monetary gaps.

“As a result, January marked a further rise in demand for unsecured credit, which fed through to higher household debt.”