Tariffs accountable for slowed international financial development, OECD says

International financial development has been downgraded by the Organisation for Financial Co-operation and Growth (OECD) – because the affect of US President Donald Trump’s tariffs turns into obvious.

Main economies together with the UK may have decrease charges of GDP – a measure of an economic system’s worth and every part produced – as a result of US’s imposition of taxes on some items it imports, the Paris-based OECD membership of 38 wealthy international locations stated.

The UK economic system will develop only one.4% this yr, versus the 1.7% beforehand anticipated.

Subsequent yr, the determine can be 1.2%, decrease than the 1.3% forecast earlier than Mr Trump took workplace in January, in accordance with the OECD interim financial outlook.

It is extra unwelcome information for Chancellor Rachel Reeves after January GDP unexpectedly shrank.

In response to the OECD figures, Ms Reeves identified the UK is forecast to be “Europe’s quickest rising G7 economic system over the approaching years – second solely to the US”.

“This report exhibits the world is altering, and elevated international headwinds corresponding to commerce uncertainty are being felt throughout the board.”

International GDP will gradual, the OECD stated, from 3.2% in 2024 to three.1% in 2025 and three% in 2026 as a result of larger commerce limitations attributable to the tariffs and the coverage uncertainty round their implementation.

US development has been revised downward to 2.2% in 2025 and 1.6% in 2026. Increased GDP of two.4% and three.1% had been anticipated for this yr and subsequent.

Whereas the Eurozone has not escaped the downgrades it’s much less impacted than first thought, the report stated.

“European economies will expertise fewer direct financial results from the tariff measures integrated within the baseline projections, however heightened geopolitical and coverage uncertainty remains to be prone to restrain development,” it stated.