UK's growth forecast cut - what does that mean?published at 15:18 British Summer Time

15:18 BST

Dharshini David
Deputy economics editor

Focusing on the UK now, and the International Monetary Fund (IMF) has cut its economic growth forecast from 1.6% to 1.1% this year.

Last month - following Chancellor Rachel Reeves's Spring Statement - economists warned that taxes may rise in the autumn, as the chancellor was only meeting her rules on the public finances with tiny margins.

How does the IMF downgrade to the UK's growth forecast impact that?

It would be an underwhelming performance, but actually is a shade ahead of the official forecast produced for Reeves by the Office for Budget Responsibility.

And with the IMF slightly increasing its predictions for some future years, this report doesn't point to a worsening of her fiscal position.

However these are just forecasts, highly uncertain. It is US President Donald Trump's seismic tariffs that has largely led to the downgrade in predictions - and the IMF warns things could turn out worse than it assumes.

In other words, come the autumn Budget, if the UK's official forecasters deem then that things have taken a turn for the worse, tax rises may still be looming.

In its latest projections, the IMF has cut its growth forecasts for a number of major economies.

Let's take a look at some of those figures:

Image source, Getty Images

As we've just been reporting, the IMF has restated the importance of an independent central bank, after US President Donald Trump continued his criticism of the chair of the Federal Reserve, Jerome Powell.

During a press conference in Washington DC, a journalist asked the IMF's chief economist Pierre-Olivier Gourinchas "how destabilising" Trump's attacks on Powell may be on financial markets.

Gourinchas said tariffs will increase "price pressures", but the IMF is projecting inflation in the US to remain at 3%, the same level as last year.

He said it's "critical" to make sure inflation expectations "remain anchored", and "everyone remains convinced that central banks will do what is necessary to bring inflation back to central bank targets".

Their credibility is "critical," he says, and part of that credibility is built on their independence.

"From that perspective, it's very important to preserve that," he adds.

Faisal Islam
Economics editor, at the IMF meeting in Washington DC

Back now to the International Monetary Fund's (IMF) press conference in Washington DC.

It says it has "jettisoned our projections" for the world economy after US President Donald Trump's announcement of what he called “reciprocal tariffs” on other countries.

While many of those tariffs were paused, the overall level of tariff is still extremely high.

In addition, uncertainty around constantly changing policies is leading to investment “pauses” and the “revaluation of credit” by banks.

The IMF also restated the importance of central bank independence, after the president called the Federal Reserve chair Jerome Powell a "total loser" and demanded interest rate cuts.

These analyses will form the basis for important discussions among finance ministers here at the IMF, and they point the finger at the US's tariff decisions.

Michael Race
Senior economics reporter

Ding, ding, ding!

The bell has sounded on Wall Street and trading in the world's biggest economy is open and rebounding following Monday's losses.

All three main indexes have opened up:

• S&P 500 - 1.14%
• Dow Jones - 1.08%
• Nasdaq - 1.27%

Why has the IMF downgraded global growth?published at 14:28 British Summer Time

14:28 BST

Michael Race
Senior economics reporter

The introduction of tariffs, and the escalating trade war between the US and China, is set to upend the long-established order of trade.

This will have a big impact on the economic growth of many countries.

The disruption, and the potential negative impact on the trade of goods that this could cause, is the reason the influential International Monetary Fund (IMF) has downgraded its growth forecasts for many countries.

Tariffs - taxes on imports from abroad - can be a barrier to trade, as businesses are put off by higher charges.

This creates uncertainty in modern supply chains, which are very interlinked.

As the IMF puts it, this increased uncertainty will lead many firms to pause and cut investment. If businesses don't invest, they are less likely to grow and hire more workers, which will hit economic growth.

The global economy is being "severely tested", as its chief economist Pierre-Olivier Gourinchas puts it.

Faisal Islam
Economics editor, at the IMF meeting in Washington DC

The IMF has just said it sees a 40% chance of a recession in the US following the trade war.

As we've been reporting, growth prospects for the US have been given the biggest downgrade of major economies over the past three months.

Other economists, for example at the Institute for International Finance, now predict the US will enter a recession this year.

These predictions come as top economic policymakers gather in Washington for the spring meetings of the International Monetary Fund (IMF) and the World Bank.

Pierre-Olivier Gourinchas, the IMF's chief economist, says the global economy "still bears significant scars" from the "severe shocks of the past four years".

"It is now being severely tested once again," he adds.

Uncertainty around trade policy was a "major factor" behind the growth downgrades, Gourinchas says.

"Faced with increased uncertainty... many firms' initial reaction will be to pause, reduce investment and cut purchases."

After those initial breaking lines, we're getting more detail from the IMF.

"Risks to the global economy have increased, and they’re firmly on the downside," economist Pierre-Olivier Gourinchas says at the beginning of the press briefing.

• Press the watch live button above to follow along - we'll also be summarising the key lines here

The IMF’s World Economic Outlook also predicts:

• China will grow by 4% this year, down from the IMF's previous estimate of 4.6%
• Canada's economy will grow by 1.4% - a cut from 2%, reflecting tariff uncertainty and "geopolitical tensions"
• Mexico is predicted to contract by 0.3% this year, compared with January's forecast of 1.4% growth
• Meanwhile Spain is the only advanced economy to see its 2025 growth forecast upgraded - to 2.5% from 2.3%. This is partly due to reconstruction activity following floods last year

The International Monetary Fund (IMF) has cut its economic growth forecasts for 2025, saying an increase in tariffs and uncertainty will lead to a "significant slowdown".

In its latest global outlook, the IMF predicts the global economy will grow by 2.8% this year, down from its previous forecast of 3.3%.

The US has been given the biggest downgrade among advanced economies - growth there is now expected to be 1.8% this year, down from its previous estimate of 2.7%.

And the UK’s growth forecast for 2025 has also been cut - down to 1.1% from the previous prediction of 1.6%

We're expecting the International Monetary Fund's (IMF) forecast on the global economy to be published imminently.

Stick with us as we go through the report and analyse what it all means.

Image source, Getty Images

Ahead of the publication of today's forecast by the International Monetary Fund (IMF), the organisation's managing director Kristalina Georgieva said that while trade tariff uncertainty is "literally off the charts", there would not be a global recession.

Speaking on Thursday, Georgieva said "our new growth projections will include notable markdowns, but not recession".

"A better balanced, more resilient world economy is within reach. We must act to secure it," she said.

Georgieva also called on Europe to cut down on "restrictions on internal trade in services" and "deepen" its single market.

She added that China needs to increase its social safety net so that there is less "precautionary saving", and that the US government needs to reduce its debt.

Faarea Masud
Business reporter

Amid all this market turmoil, in around half an hour's time the International Monetary Fund (IMF) is expected to be releasing its closely-watched forecast on the global economy. But what is the IMF and why is it so important?

The IMF is an organisation that tries to stabilise the global economy by:

• Tracking economic and financial events
• Advising its members on how to improve their economies
• Issuing short-term loans and assistance to countries who are struggling

Any country can join the IMF if it meets certain economic criteria and gives a sum of money called a “quota subscription”. There are currently 190 member countries – though the richest give a larger contribution.

These quota subscriptions fund loans, which are given to member countries that need funds.

It is often described as a "lender of last resort". In times of crisis, countries look to it for financial assistance – although it has been criticised for having harsh conditions attached to its lending, such as forcing countries to reduce government borrowing.

Image source, Getty Images

Speaking of tariffs, you could be forgiven for not keeping up with the latest announcements, but another eye-catching new import tax has been touted today.

The US has announced plans to impose tariffs of up to 3,521% on imports of solar panels from four South East Asian countries.

It comes after an investigation that began a year ago when several major solar equipment producers asked the administration of then-President Joe Biden to protect their US operations.

The proposed levies - targeting companies in Cambodia, Thailand, Malaysia and Vietnam - are in response to allegations of subsidies from China and the dumping of unfairly cheap products in the US market.

A separate US government agency, the International Trade Commission, is due to reach a final decision on the new tariffs in June.

• Read more: US sets tariffs of up to 3,521% on South East Asia solar panels

Tommy Lumby
BBC business data journalist

The value of the US dollar remains at lows last seen more than three years ago, after it was hit by uncertainty surrounding Trump’s trade tariffs.

The US dollar index - which charts its value against a basket of other major world currencies - was at 98.4 by late morning on Tuesday. Apart from Monday, that's the lowest it has been since March 2022.

The value of the dollar often rises during market turbulence because it’s seen as a safe asset to invest in when others are tumbling.

But the expected impact of tariffs on US economic growth and the cost of repaying government debt may have shaken that sense of security, at least temporarily.

Michael Race
Senior economics reporter

While the stock markets have been volatile, a lot of investors have been watching the US bond market closely.

The market is how the government borrows money. It sells bonds - essentially as an 'I owe you' - to raise money from investors, and in return it pays interest.

Dramatic moves for this market are rare, especially for the US, but following the introduction of tariffs the amount the US government has to pay to borrow money has shot up.

This is a sign of investors losing confidence in the world's largest economy and seeing the US as a riskier bet than normal, and so demanding higher returns to lend money.

This almost never happens, because the US is an economic powerhouse and during times of stock market turmoil, investors generally rush to buy government bonds because they are seen as a safe place to invest their money. There is little risk.

That view is certainly being questioned.

• Why everyone is suddenly so interested in US bond markets

Faarea Masud
Business reporter

Elsewhere, the price of gold hit a new all-time record high on Tuesday, breaking the $3,500 (£2,613) per ounce mark as investors seek out so-called "safe haven" assets.

Gold is seen as a safe investment during economically turbulent times.

With Donald Trump's trade war, and recent falls in the stock markets, gold is seeing high prices as more people are interested in keeping their money protected in a solid investment.

Image source, Getty Images

The US markets plunging yesterday following US President Donald Trump's criticism of the chair of the Federal Reserve, Jerome Powell.

Like the Bank of England in the UK, the Federal Reserve decides interest rates independently from the government.

But in a social media post, Trump called on Jerome Powell to cut interest rates "pre-emptively" to help boost the economy.

"There can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW," he wrote.

The president's intensifying clash with Powell, whom he named to lead the Fed during his first term, has added to recent market turmoil over tariffs. Powell has previously warned that Trump's import taxes were likely to drive up prices and slow the economy.

Last week, the president publicly called for Powell to be fired, writing on social media on Thursday: "Powell's termination cannot come fast enough."

Such a move would be controversial - and legally questionable - given the bank's traditional independence from the government.

Michael Race
Senior economics reporter

After the losses in the US's major stock exchanges yesterday, trading across the rest of the world has been a lot calmer.

In the UK currently, the FTSE 100 is trading up, albeit very marginally, while Germany's Dax index and France's Cac 40 are slightly down.

Most of the main stock indexes in the Asia-Pacific region ended the day subdued. Japan's Nikkei 225 closed around 0.1% lower, while Hong Kong's Hang Seng closed about 0.3% higher.

And while yesterday all three US stock indexes were down around 2.5%, extending losses seen so far this year, looking at the futures market ahead of the US markets opening at 09:30 EST (14:30 BST), things are looking up.