Starmer's Greenland stance risks plunging 'flatlining' Britain into a full blown recession

Britain could be plunged into a recession if the US imposes fresh tariffs on imports from countries willing to defend Greenland, economists have cautioned.

President Donald Trump has threatened to slap a 10 per cent levy on goods from the UK, Denmark, Finland, France, Germany, the Netherlands, Norway and Sweden starting February 1, with the tariff set to jump to 25 per cent in June.

According to a report by Capital Economics, such a move could wipe up to 0.75 per cent off the UK economy, spelling trouble for British carmakers and the pharmaceuticals industry.

Paul Dales, chief UK economist at Capital Economics, warned: "With the UK economy currently growing by 0.2 per cent to 0.3 per cent a quarter, if this hit came all at once it could trigger a recession."

However, he noted that the long-term political and geopolitical fallout would be far more significant.

UK lags behind US and Canada in growth forecasts

The stark warning comes as the International Monetary Fund (IMF) predicted that the UK economy will continue to trail the US and Canada in terms of growth this year and next.

The projections, outlined in the IMF's latest World Economic Outlook report, suggest that Prime Minister Keir Starmer and Chancellor Rachel Reeves are struggling to deliver on their pledge to make Britain the fastest-growing economy in the G7.

While the UK is expected to expand by 1.3 per cent this year and 1.5 per cent in 2027, the IMF forecasts growth of 2.4 per cent and 2 per cent for the US, and 1.6 per cent and 1.9 per cent for Canada over the same period.

Chancellor Reeves hailed the IMF's prediction that the UK will outperform other major European economies in the next two years, but shadow chancellor Mel Stride accused her of "gaslighting" the nation.

Stride argued: "The fact Rachel Reeves is celebrating it shows how desperate she has become. The economy is flatlining. Gaslighting the country won't fix the economy - only a serious plan to lower taxes and control welfare will."

Consumer confidence hits nine-month low

In another blow to the UK economy, S&P Global reported that its "consumer sentiment index," a crucial gauge of household confidence, has dropped to a nine-month low at the start of the year, marking the fourth consecutive monthly decline.

Maryam Baluch, an economist at S&P Global, said the data for early 2026 "painted a persistently downbeat picture among UK households," with consumer confidence weakening further and households' current financial well-being deteriorating sharply.

Baluch added: "Concerningly, labour market expectations have deteriorated. Households reported income growth from employment slowing to its weakest pace in ten months, coupled with rising concerns over job security.

"This job market uncertainty prompted households to maintain a cautious stance on discretionary spending. However, savings nevertheless continued to come under pressure, with some households slipping into deficit to manage elevated living costs and relying on loans to bridge financial gaps.

"As a result, January marked a further rise in demand for unsecured credit, which fed through to higher household debt."