United Kingdom
The UK economy grew by 0.7% in Q1 2025, surpassing expectations. The IMF raised its 2025 growth forecast to 1.2%, citing monetary easing and increased public investment. However, the IMF warns that U.S. tariffs could reduce UK GDP by 0.3% by 2026. Chancellor Rachel Reeves has been advised to refine fiscal rules to maintain flexibility amid economic uncertainties.
The Bank of England (BoE) reduced the base rate to 4.25% in May. The next Monetary Policy Committee (MPC) meeting is scheduled for the 19th of June 2025. While some policymakers advocate for further cuts to support growth amid global trade uncertainties, others express caution due to persistent inflationary pressures. The BoE emphasises a gradual and careful approach to future rate adjustments.
United States
The U.S. economy contracted by 0.3% in Q1 2025, raising concerns about stagflation. The Federal Reserve maintained interest rates at 4.25%-4.5%, citing tariff-induced inflation and slowing growth. President Trump urged the Fed to cut rates, arguing that high rates disadvantage the U.S. economy. Consumer confidence showed modest improvement in May, with more consumers expecting better business conditions and job prospects.
In a significant legal development, the U.S. Court of International Trade ruled that President Trump’s sweeping tariffs, imposed under the 1977 International Emergency Economic Powers Act (IEEPA), were unconstitutional. The court found that the IEEPA does not grant the president the authority to impose such broad import taxes. However, a federal appeals court temporarily reinstated the tariffs while the case is under review, maintaining the status quo for now.
Europe
The EU’s economy is projected to grow by 1.1% in 2025, with the euro area at 0.9%. Growth forecasts have been downgraded due to increased tariffs and global trade uncertainties. Despite this, the labour market remains robust, with unemployment expected to fall to a historic low of 5.7% by 2026.
In a significant development, President Trump has agreed to delay the implementation of a proposed 50% tariff on European Union imports until the 9th of July 2025, following a request from European Commission President Ursula von der Leyen. This postponement allows both parties additional time to negotiate a trade agreement and has been welcomed by EU leaders. The delay has also positively impacted financial markets, with European shares rallying in response.
Asia
India is projected to be the primary engine of global economic growth in 2025 and 2026, driven by strong domestic demand and digital infrastructure. In Japan, retail sales rose by 3.3% year-on-year in April, while industrial output fell by 0.9%. The Tokyo Consumer Price Index, a leading indicator of national inflation, will be released in about three weeks.
China has welcomed the U.S. Court of International Trade’s decision to invalidate tariffs imposed during President Trump’s administration, urging Washington to permanently abolish these measures. However, Beijing is adopting a cautious approach, choosing to wait for a definitive resolution of the U.S. legal process before making any significant policy moves. This stance reflects China’s strategic patience amid ongoing trade tensions.
In the tech sector, Apple Inc. is facing increased pressure from President Trump to relocate iPhone production to the United States. Despite threats of a 25% tariff on iPhones not manufactured domestically, Apple has significantly increased its iPhone exports from India to the U.S., reaching nearly 3 million units – a 76% surge – as it continues to shift manufacturing away from China. Analysts suggest that moving iPhone production to the U.S. would be logistically challenging and could raise the cost of an iPhone to around $3,500.
Metals
Gold: This week, gold prices experienced a decline of approximately 1.6%, at the time of writing it was trading at $3,318.89 per ounce after opening the week at $3,374.52. The downturn was influenced by a strengthening U.S. dollar and investor anticipation of the upcoming U.S. core Personal Consumption Expenditures (PCE) inflation report, causing the Federal reserve to hold Fed Rates at their current levels. However prices are forecasted to reach $4,000/oz by year-end, driven by global economic uncertainties.
Copper: Prices have remained relatively stable, trading around $4.89 per pound as of May the 26th. However, options activity has declined in May compared to April, indicating a cooling in speculative interest. The market remains cautious amid global uncertainties and potential tariff impacts.
Oil
At one point this week WTI prices declined over 1%, influenced by a U.S. court ruling blocking President Trump’s tariffs and potential OPEC+ output hikes. However at the time of writing, WTI was roughly flat on where it opened the week. The International Energy Agency forecasts a slowdown in global oil demand growth to 650,000 barrels per day for the remainder of 2025, due to economic headwinds and increased electric vehicle adoption.
