A prominent British think tank said on Wednesday that the country’s already ‘snail paced’ economic growth rate could become even more halved if Donald Trump wins the U.S. presidential election and enacts drastic import tariffs.
The National Institute of Economic and Social Research had in its recent report, painted a bleak image for Britain’s economy over the coming years – this is even disregarding Trump’s tariff plan – with growth seen slowing to 1.1% in 2026 from 1.2% next year and only reaching a lacklustre 1.7% in 2030.
However the country, which is sensitive to changes in global trade flows, could mark an economic growth of just 0.4% next year if the U.S. establishes tariffs like those Trump has promised, said Ahmet Kaya, a principal economist at NIESR.
In addition, the world economy would also suffer if Trump imposes tariffs of 60% on Chinese imports and 10% on imports from elsewhere.
The Bank of England would most likely have to increase interest rates to counter a rise in prices caused by higher U.S. tariffs but the inflation would still likely rise by between 2 and 3 percentage points over two years, Kaya added.
That type of increased borrowing costs would deal a major blow to the plans of the new UK government to use more borrowing in addition to tax rises to fund increase their spending.
Trump, had during his campaign rallies, described tariffs as “the most beautiful word in the world”, saying that his plan would increase U.S. manufacturing, jobs and incomes and earn trillions of dollars in federal revenues over 10 years.
A slow British growth would be a hindrance for Prime Minister Keir Starmer, who had promised voters that he will turn the economy into one of the fastest-growing in the Group of Seven.
An increase in social security contributions paid by employers (the biggest tax rise in the government’s budget plan announced last week) would cause to a small rise in unemployment over the next five years, the NIESR predicted.
