April 2025 monthly update

Read our April monthly update – a roundup of the latest financial news and economic headlines.

Bank of England warns of risk to UK growth from Trump’s tariffs

Governor of the Bank of England (BoE) Andrew Bailey has stated that the central bank must “take seriously” the risks to Britain’s economic growth posed by US President Donald Trump’s tariff policies. His reasoning being the notion that trade supports growth and “fragmenting the global economy would be bad for growth.”[1]

“The UK is a very open economy. It’s not just the relationship between the US and the UK — it’s the relationship between the US and the rest of the world,” Bailey further commented at an Institute of International Finance conference.[2]

The Governor does not, however, believe that the country is close to recession. This is despite negative revisions by both the BoE and the Office for Budget Responsibility. Even though the International Monetary Fund downgraded the UK’s 2025 growth forecast from 1.6% to 1.1%, recent figures from the Office for National Statistics saw the economy recover at a faster rate than expected.[3]

During this time, Britain hoped to persuade the Trump administration to remove the 25% tariff it has placed on UK car imports to the USA. Chancellor Rachel Reeves stated that tariffs are “blunt instruments” for dealing with trade imbalance, and instead called for dialogue.[4] In subsequent weeks, the UK reached a deal with the USA that lowered the tariff to 10% for a maximum of 100,000 cars – the number exported by Britain last year. All vehicles above that will be subject to a 27.5% Import Tax.[5]

Business groups urge for amendments to workers’ rights bill

In an open letter, Britain’s five largest business groups have warned against the government’s proposed Employment Rights Bill. They urge the House of Lords to amend the legislation to avoid potential negative impacts on growth and employment. Known as the B5, the signatories consist of the British Chambers of Commerce, the Confederation of British Industry (CBI), the Institute of Directors, the Federation of Small Businesses, and Make UK.[6]

The bill aims to introduce new worker protections such as guaranteed hours contracts, sick pay, protection from unfair dismissal, and parental leave from the first day of employment. In the B5’s opinion, this could harm businesses, particularly during an uncertain economic period. The bill’s current form could discourage companies from hiring due to the risk of costly tribunal cases.[7] Furthermore, the B5 criticised the near ban on “fire-and-rehire” practices. This involves dismissing employees and re-employing them on less favourable terms. They believe this could reduce flexibility and involve unnecessary administrative costs. Additionally, they claim the planned upgrades to union rights remove accountability mechanisms and so could lead to conflict over cooperation.[8]

In response, the government emphasised that the bill has strong support from both businesses and the public. “We’ve consulted extensively with business on our proposals,” their spokesperson added. “We will engage on the implementation of legislation to ensure it works for employers and workers alike.”[9]

Due to a lack of detailed information, the Office for Budget Responsibility (OBR) has not included the Employment Rights Bill in its forecasts. It did, however, note that regulations affecting business and labour market flexibility are likely to have “material and probably net negative” impacts on “employment, prices, and productivity”.[10]

Retailers warn of Chinese product “dumping” due to Trump’s tariffs

The British Retail Consortium (BRC) stated that domestic retailers are worried about cheaper Chinese goods being rerouted away from the USA and “dumped” into the UK and Europe. This is in the wake of US President Donald Trump’s 145% tariff on China.[11]

There are early signs of “stock being diverted into European markets in a straightforward dumping way”, claimed Alex Baldock, CEO of Currys. He further commented: “the single biggest area where lots of stock is likely to land in the UK — at least in my world — is from the likes of Shein, Temu, Alibaba, TikTok shop, and most of all, Amazon marketplace, [which have a lot of Chinese vendors].”[12]

Analysts predict that the redirection of goods could pressure pricing for lower-end retailers, impacting companies like Primark and B&M. Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA) shared similar sentiments. He thinks that, while consumers will see lower prices, brick-and-mortar stores will be at an even greater disadvantage due to the “unfair” marketplace.[13]

In addition, alongside his controversial tariff policies, Trump also ended a tax loophole for imports worth up to $800. As such, UK businesses are now urging the government to review a similar tax exemption that exists for imports worth up to £135 ($178).[14]