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The EY Item Club has downgraded its UK growth forecast for this year to 0.8% from 1.0%, and cut it to 0.9% from 1.6% for 2026.

"Businesses thrive on certainty, so it's unsurprising that an unpredictable global market is translating into lower levels of business investment over the short term," said Anna Anthony, EY UK & Ireland regional managing partner.

EY said the US tariffs on the UK and other countries are expected to create a significant obstacle for UK exports.

Even if tariffs against the UK are not extended, EY said any further trade tensions could have an indirect impact on UK growth by damaging the global economy.

"US tariffs will act as a drag on UK growth and we're likely to see a slowdown in economic activity from the second quarter of this year through to early next year," said Matt Swannell, chief economic adviser to the EY Item Club.