Trade tensions escalating: UK recession risk on the horizon

Economists are raising alarms about Britain's economic outlook as tariff policies loom. Capital Economics warns that if trade levies expand as expected, the UK could face a significant contraction—GDP potentially shrinking between 0.3% and 0.75%. That translates to roughly £22 billion in economic losses.

For traders and investors monitoring global macro trends, this matters. Trade wars don't stay isolated. When major economies face recessionary pressure, risk appetite typically contracts across all asset classes. Currency fluctuations, equity selloffs, and shifts in monetary policy often follow.

The timing adds another layer of complexity to an already uncertain market environment. Whether you're hedging exposure or positioning for volatility, understanding how geopolitical and trade policy shifts ripple through financial markets remains crucial.