Bank of England offers a downbeat assessment of Trump’s trade war, but good news for low-income families and homeowners 8 May 2025 The Bank of England’s take on the impact of President Trump’s first 100 days on the UK economy was low on growth and high on uncertainty, but its downbeat outlook came with some good news for families, the Resolution Foundation said today (Thursday). The big picture context to the Bank’s Monetary Policy Report (MPR) and decision to cut interest rates from 4.5 to 4.25 per cent was a fragile and uncertain global economic outlook. Indeed, the word uncertainty was mentioned a massive 97 times in the MPR. Although the Bank’s overall take on the UK’s economic prospects was downbeat, it contained some good news: Stronger near-term growth. While the OBR and IMF revised down their UK GDP projections for 2025 by 1 and 0.5 percentage points respectively, the Bank have revised theirs up from 0.7 to 1.1 per cent. This upgrade – along with another cut in interest rates – provides a sliver of good news for the Chancellor as she tries to tackle the UK’s economic malaise. Lower mortgage costs. While the latest cut was expected, roughly 625,000 households coming off two-year fixed deals over the next 12 months are likely to face lower rates. However, the Foundation notes that there is still a large cohort of around 690,000 households who secured five-year deals between the second half of 2020 and first half of 2021, who are still set to see their mortgage costs rise. Lower fuel and energy bills. The Bank has revised down its inflation forecast for Q3 2025 from 3.7 per cent to 3.5 per cent, due primarily to lower fuel and energy costs. With the poorest fifth of households spending 50 per cent more of their budgets on these essentials as the richest fifth, they are set to benefit most from lower inflation expectations. James Smith, Research Director at the Resolution Foundation, said: “The Bank’s take on how the first 100 days of President Trump has affected the UK economy was clear: high uncertainty and low growth. “But there were some short-term silver linings amidst this downbeat assessment, with most mortgagors set to face lower mortgage costs, and low-income families set to be benefit from lower fuel and energy bills. “Ultimately though, the heightened economic uncertainty identified by the Bank creates an unwelcome headwind of lower growth, weaker public finances and more painful fiscal choices.”
