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Several economists recently issued warnings: if the Trump administration quickly implements the latest tariff plan, the risk of a UK recession will sharply increase. The calculations from Capital Economics show that based on the existing 10% import tax in the UK, if new tariffs are rapidly put into effect, GDP could face a decline of 0.3% to 0.75%. In a more extreme scenario, if the US raises tariffs from June to 25%, the UK economy could be directly hit by 21.6 billion pounds.
Does this number sound scary? Paul Dales, Chief UK Economist at Capital Economics, pointed out the key issue: the current quarterly growth rate of the UK economy is only 0.2% to 0.3%, which is quite fragile. Once external shocks are fully unleashed, a recession is highly likely. In other words, the UK economy has little room for buffer.