Trade

Rising tariffs and trade wars are reshaping global trade. Is this the end of globalisation—and what does it mean for the UK and the world economy?

Professor Meredith Crowley delivered the 2025 IFS Annual Lecture. 

We discuss the economic consequences of tariffs, why governments use them, and whether they actually achieve their intended goals.

Growth has been better than expected this year, but the UK’s recovery is not yet secure. Structural changes will require reform, not just investment.

For the last four centuries, technology and wage rates have evolved together.

What do shifts in trade patterns – such as surges in import competition or new trade barriers due to Brexit – mean for different workers?

What do shifts in trade patterns – such as surges in import competition or new trade barriers due to Brexit – mean for different workers?

The phase of synchronised growth the world enjoyed in 2017 and early 2018 has come to an end. Following two years when the global economy finally expanded faster than its long-run average of 3.0%, growth looks set to slow to 2.8% in 2019. This is a significant disappointment compared with forecasts from this time last year, which predicted global growth of 3.2% in 2019.

The overall outlook for economic growth, and its constituent parts, underpins any fiscal event, with implications for the public finances, public spending, taxation and living standards. Growth in the size of the UK economy – known as gross domestic product or GDP – has averaged 1.3% (on an annualised basis) over the last four quarters. That is somewhat below its potential rate of 1.4% (as estimated by the Bank of England) and the 1.5% growth rate for 2019 that we forecast in last year’s Green Budget, and well below the average of 2.0% per year between 2010 and 2015.

The global outlook and recent trends in the UK economy point to significant headwinds for growth going forwards. Arguably the most important determinant of the UK’s economic trajectory will be the continuing process of leaving the European Union. Brexit no longer ‘just’ determines future relations with the UK’s largest trading partner and the transition towards them. It has become intertwined with the political outlook and thus broader economic policies, including monetary policy.