The International Monetary Fund (IMF) has raised its growth forecast for the UK economy this year, projecting a 1.6% expansion compared to its previous estimate of 1.5%. However, the IMF has also expressed concerns about the potential global impact of former US President Donald Trump’s economic proposals.

Central to the IMF’s warning are Trump’s plans to impose tariffs, which could exacerbate trade tensions, disrupt global supply chains, and deter investment. While tax cuts, deregulation, and tariffs might offer short-term economic boosts for the US, the IMF cautions that they could ultimately harm the economy by creating inflationary pressures and weakening confidence in US Treasury bonds as a secure investment.

Trump has proposed tariffs of up to 60% on Chinese goods, 25% on imports from Canada and Mexico, and 10% on all global imports. These measures, along with his stance on potentially penalising the BRICS nations for creating a rival currency to the US dollar, have raised alarm among world leaders. The IMF warned such policies could lead to a boom-and-bust cycle, destabilising global growth and pulling funds away from emerging economies.

The upgraded forecast for the UK, which is set to outperform Germany, France, and Italy over the next two years, comes as a relief for Chancellor Rachel Reeves amidst mounting pressure to spur economic growth. However, the IMF also noted that the UK’s growth last year was weaker than expected. Globally, the IMF predicts modest growth of 3.3% for 2025 and 2026, cautioning against the risks posed by policy uncertainty under Trump’s potential leadership.