The director of the Institute for Fiscal Studies (IFS) has suggested the UK could be heading for a recession as a trade deal may not be enough to revive crumbling markets or prevent a slump in economic growth. 

Paul Johnson, who is set to leave the leading economics think tank in the summer, told Times Radio that the scale or market falls around the world resembled events seen during a recession. 

President Trump’s sweeping tariffs on goods, ranging between ten per cent and 49 per cent, have driven mass selloffs, with Johnson warning that the instability will leave people “a lot worse off”. 

“It’s clearly an indication that people think companies will make a lot less profit and that could mean more in the way of layoffs and redundancies,” he said. 

“Unless something happens, we are certainly in for a period of much slower growth than we were expecting, quite possibly a recession as a result of the actions of one man.”

When asked whether a series of deals aimed at mitigating Trump’s tariffs would support the UK economy, Johnson said: “I rather fear we’re screwed either way.”

“If it became clear that there was a road through this to different levels of tariffs, then that may be positive for the markets. But the uncertainty is going to be damaging whatever [the situation],” he added. 

Many forecasters are pencilling in lower growth for 2025 and 2026 than previously expected.