Image Credentials: Image Title: U.S. Tariff War Could Plunge UK Economy into Recession, Economists Warn Source: (sora.openai) Date: January 2026. Attribution: This image was created using AI-generated imagery (sora.openai) and does not depict a real-world scene.
By Open Chronicle News Desk with Agencies
LONDON – Top economists have issued a stark warning that the United Kingdom could be headed for a recession as a direct consequence of President Trump’s latest tariff offensive. The warning comes as the U.S. administration leverages trade penalties to pressure European allies over the proposed annexation of Greenland.
President Trump has threatened to slap an additional 10% tariff on goods imported from several European nations, including the UK, starting February 1. Analysts at Capital Economics suggest that if the full impact of these tariffs is felt “all at once,” it could trigger a contraction in the British economy.
A £22 Billion Hit to GDP
The proposed tariffs could cost the UK up to 0.75% of its Gross Domestic Product (GDP), a figure equivalent to approximately £22 billion. Paul Dales, Chief UK Economist at Capital Economics, noted that with the UK economy currently growing at a modest pace of 0.2% to 0.3% per quarter, such a significant blow could easily tip the country into negative growth.
“If this hit came all at once, it could trigger a recession,” Dales stated, though he added that the impact would likely be spread over several quarters.
Transatlantic Relations at a Breaking Point
The geopolitical fallout extends beyond trade figures. Experts suggest that the Greenland dispute is driving a wedge between London and Washington, potentially causing “irreparable damage” to the NATO alliance. Prime Minister Keir Starmer has called for “calm discussion,” noting that the economic risks to the UK are “more direct now than at any time we can remember.”
Market analysts are also observing a “geopolitical risk premium” being priced into currencies and equities. Lale Akoner, a strategist at eToro, highlighted that the current policy unpredictability is contributing to lower investment levels across the board.
As the February deadline approaches, many UK firms are reportedly rushing to boost exports to the U.S. before the tariffs take effect. However, the long-term outlook remains grim if the diplomatic deadlock over Greenland continues to escalate into a full-scale trade war.