UK Companies Remain Resilient as US Tariff Impact Shows Limited Reach

Two-thirds of British companies anticipate no significant impact from US tariff policies, according to the latest Bank of England decision-maker survey. The June report reveals that merely 29 per cent of firms forecast reduced sales over the coming year due to President Trump’s trade measures.

The survey demonstrates that 25 per cent of organisations expect their investment and capital expenditure to be negatively affected, whilst a fifth predict lower average prices resulting from the tariffs. A modest 12 per cent are preparing for price increases, highlighting the mixed economic outlook.

Britain’s recent partial trade agreement with the White House has secured exemptions for steel and aluminium imports, whilst reducing tariffs on UK automobile exports to 10 per cent. The crucial deadline of 9 July marks the end of a 90-day grace period for global trade negotiations with the US administration.

Despite limited direct exposure to US tariffs, economic experts caution about indirect consequences. The uncertainty surrounding trade relations could potentially impact broader investment spending and hiring patterns across the UK economy.

The Bank’s survey also examined wage and inflation expectations, with one-year-ahead inflation forecasts showing a slight decrease from 3.2 per cent to 3.1 per cent in June. Companies reported average wage growth of 4.6 per cent for the quarter ending June, projecting a decline to 3.6 per cent over the next year.

Of particular concern to the Bank of England, businesses indicated plans to raise prices by 3.7 per cent over the next year, up from May’s projection of 3.5 per cent. This persistent inflationary pressure suggests the Bank may implement just one more rate cut this year, with current rates standing at 4.25 per cent.