UK recession danger if Trump imposes Greenland tariffs on UK | UK | News

Economists have warned Britain could fall into recession if the US imposes new tariffs on imports from countries seeking to defend Greenland.

Minister Donald Trump The UK has threatened to impose a 10 percent tax on goods from Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden from February 1; The tariff will increase to 25 percent in June.

Such a move could harm up to 0.75 percent of the UK economy and create problems for British carmakers and the pharmaceutical industry, according to a report by Capital Economics.

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

However, he stated that the long-term political and geopolitical consequences will be much more important.

UK lags behind US and Canada in growth forecasts

The stark warning comes as the International Monetary Fund (IMF) predicts the UK economy will continue to trail the US and Canada in terms of growth this year and next.

Forecasts outlined in the IMF’s latest World Economic Outlook report show Prime Minister Keir Starmer and Chancellor Rachel Reeves are struggling to deliver on their promise to make the UK the fastest-growing economy in the G7.

While the UK is expected to grow 1.3 percent this year and 1.5 percent in 2027, the IMF predicts 2.4 percent and 2 percent growth for the USA and 1.6 percent and 1.9 percent for Canada in the same period.

Chancellor Reeves welcomed the IMF’s prediction that the UK would outperform other major European economies over the next two years, but shadow chancellor Mel Stride accused him of “gaslighting” the country.

Stride argued: “The fact that Rachel Reeves is celebrating this shows how desperate she is. The economy is stagnating. Fueling the country won’t fix the economy; only a serious plan to cut taxes and control welfare will.”

Consumer confidence at nine-month low

S&P Global dealt another blow to the UK economy; It reported that the “consumer sentiment index”, an important indicator of household confidence, fell to a nine-month low at the beginning of the year, marking the fourth consecutive monthly decline.

S&P Global economist Maryam Baluch said data for early 2026 “paints a consistently poor picture among UK households”, with consumer confidence weakening further and households’ current financial well-being deteriorating sharply.

Baluch added: “Worryingly, labor market prospects have deteriorated. Households reported that income growth due to employment slowed to the weakest pace in ten months, accompanied by growing concerns about job security.”

“This uncertainty in the labor market has led households to take a cautious stance on discretionary spending. However, savings have continued to come under pressure, with some households running into budget deficits to manage rising living costs and relying on loans to cover financial shortfalls.

“As a result, January marked a further increase in demand for unsecured credit, resulting in increased household debt.”