S&P slashes global growth forecasts on trade war fears

•  But analysts now say the UK economic will perform better this year

By MIKE SHEEN

Updated: 14:18 BST, 2 May 2025

S&P Global Ratings has slashed forecasts for global growth on Friday, warning US trade tariffs will depress economic activity in the coming years.

The ratings agency said warned a ‘seismic and uncertain shift in US trade policy’ will make global economic output 0.3 percentage points weaker this year and next with all regions negatively impacted.

But the group’s analysts warned growth forecasts could be revised even lower.

S&P said: ‘The risks to our baseline remain firmly on the downside in the form of a stronger-than-anticipated spillover from the tariff shock to the real economy.

‘The longer-term configuration of the global economy, including the role of the US, is also less certain.’

Bucking the trend – in the short term at least – S&P now expects the UK economy to grow by 0.9 per cent this year, up from 0.8 per cent in its forecasts in late March.

However, it now thinks the UK growth will be 0.2 percentage points weaker than first thought next year at 1.4 per cent.

The forecast compares to an average projection among City firms of 0.9 and 1.1 per cent growth in 2025 and 2026, respectively, according to the most recently available (16 April) data published by HM Treasury.

S&P expects Donald Trump’s trade war to make US economic output 0.5 percentage points weaker this year at 1.5 per cent. 

It cut its 2026 and 2027 projections for the US economy by 0.1 and 0.2 percent points, respectively, but increased it by 0.1 percentage points for 2028.

It follows official data published earlier this week that showed the impact tariffs have already had on the US economy, which shrunk during the first quarter largely as a result of stockpiling imports before levies came into effect.

Eurozone economic output is set to be 0.1 and 0.2 percentage points weaker than forecast in March in 2025 and 2026, respectively. Germany is expected to take the worst hit among all major economies in the bloc.

S&P said: ‘Our revised numbers combine both direct and indirect effects of the tariffs.

‘The direct effects comprise the size of the tariff and the exposure to the US as a trading partner.

‘The indirect effects comprise lower growth in all trading partners as well as the effects of confidence and uncertainty.

‘In many cases, the indirect effects via the uncertainty channel are larger than the direct effects from the tariffs on profits and relative prices.’

Trump tariffs set to weigh on global economic output 

DIY INVESTING PLATFORMS

AJ Bell

AJ Bell

Easy investing and ready-made portfolios

Hargreaves Lansdown

Hargreaves Lansdown

Free fund dealing and investment ideas

interactive investor

interactive investor

Flat-fee investing from £4.99 per month

InvestEngine

InvestEngine

Account and trading fee-free ETF investing

Trading 212

Trading 212

Free share dealing and no account fee

Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.

Compare the best investing account for you

:
S&P slashes global growth forecasts on trade war fears

***
Read more at DailyMail.co.uk