The latest US-imposed tariffs on UK goods are expected to create ripple effects across the economy, particularly influencing inflation, interest rates, and overall growth. Here's a closer look at what to expect:

Inflation Outlook: Will Prices Rise?

With higher costs for UK exports to the US, domestic consumers may feel the impact through price increases. The National Institute of Economic and Social Research (NIESR) estimates these tariffs could push UK inflation up by 3.4 percentage points in 2025.

Interest Rate Predictions: What Will the Bank of England Do?

To combat inflation, the Bank of England may reconsider its monetary policy approach. Initially planning gradual rate cuts from 5.25% in 2023 to 4.5% in early 2025, policymakers might adjust their stance. Some projections suggest rates could settle around 3.75% by the end of 2025 unless inflation spikes further.

Economic Growth: A Slowdown Ahead?

Beyond inflation and interest rates, tariffs could also weigh on UK GDP growth. The Office for Budget Responsibility (OBR) predicts a 0.6% reduction in GDP, even if the UK chooses not to impose retaliatory tariffs.

Conclusion: What This Means for You

US tariffs on UK goods could result in higher prices, fluctuating interest rates, and slower economic growth. The coming months will be crucial as policymakers react to these pressures.

For more insights on UK economic trends, stay updated with our latest analysis.