A new global economic assessment paints a picture of a world in a precarious balance. On one hand, “unexpected resilience” has led to an upgraded 2025 growth forecast of 3.2%. On the other, a trio of major risks—delayed tariff impacts, restrictive immigration policies, and frothy financial markets—threatens to tip the economy into a downturn, with the long-term outlook remaining “dim.”
The report argues that the feared impact of Donald Trump’s tariffs has been postponed rather than avoided. It suggests that a wave of pre-emptive buying by consumers and businesses created a temporary economic buffer. The real damage to investment confidence is expected to surface over time, mirroring the slow-burn effect observed in the UK following its EU withdrawal.
Adding to the list of concerns is the global trend toward tighter immigration controls. The report provides a stark quantitative warning for the United States, projecting that its crackdown could reduce national GDP by as much as 0.7%. This policy is also flagged as a source of future inflation in labor-dependent sectors like agriculture and hospitality.
The stability of financial markets is also called into question. With stock valuations described as “stretched,” particularly those linked to the AI boom, the report warns of the potential for a painful “correction.” Such a downturn could trigger a “sharp” contraction in investment, which has been a crucial driver of recent economic performance.
For the UK, the forecast is a classic mixed bag: a slight improvement in growth to 1.3% for the year, but with the unenviable title of having the G7’s highest inflation in 2025 and 2026. This has prompted specific advice for the Bank of England to maintain its cautious stance and not rush into monetary easing.
A Precarious Balance: Growth Up, But Tariffs, Immigration and Market Risks Mount
