A lot has happened in a short few months. And, at times, it can be hard to keep up.
So, following our latest economic update, here’s the latest need-to-know information and how it‘s affecting UK businesses.
Read on to learn how rising costs and a trade war are affecting businesses across the country. Plus, how you can get fresh insights straight to your inbox with our online Subscription Centre.
The US has kicked off a full-fledged trade war: On 2 April, US president Donald Trump announced “reciprocal” tariffs that exceeded expectations, with products imported from China set to be taxed at a staggering 130% from 10 April.
Since taking office in January, President Trump has announced a salvo of tariff hikes on US imports, particularly against China, though several exemptions and carve-outs have been crafted. This change means the effective US tariff rate is now at its highest level since the early 1900s and some countries have retaliated with their own increases.
UK exports now face a - +5.6pps tariff hike to 9.3% on average The world has temporarily entered a trade war, though retaliation has been muted so far except from China.
Lower economic growth is expected due to higher trade restrictions (global GDP is expected to be at its lowest since the pandemic) and a weaker US economy. However, the true impact on inflation and insolvencies is yet to be revealed.
Global trade of goods and services, annual growth
Here in the UK, we’ve seen inflation fall for the second month in a row – down to 2.6% - and we’re among a handful of countries that are most likely to absorb Chinese exports no longer bound for the US.
However, for now, many companies across the world are adopting short-term strategies, frontloading imports, diversifying supply chains, and adjusting prices while confidence is low.
Policy uncertainty is also affecting investments, especially outside of the US. Global insolvencies are projected to rise in 2025 as a result, with the US predicted a 16% increase and Western Europe a 5% rise.
Read more: How a potential ‘trade war’ is increasing political risk
Prior to this, the UK had experienced a decrease in insolvencies - its first year-on-year decline in three years – despite a global 10% increase in 2024. However, there’s now uncertainty around February 2025’s predictions which stated UK insolvencies are expected to fall 3% in 2025 and 7% in 2026.
Read more: UK business insolvencies begin slow descent after record high
You may think you know how your business is performing, but do you know its true insolvency risk? Conducting a credit risk assessment will help you plan accurately for the future.
Consider factors such as your:
Read more: What is financial risk and how can it be controlled?
Once you understand your position, consider that of your suppliers and customers using monitoring and insight services and then act accordingly. Beyond trade credit insurance which can help inform credit terms, you can protect your business and minimise insolvency risk by:
Read more: What is credit risk and how to anticipate the worst-case scenario
Prevention is key, and business protection plays a big part.
At Allianz Trade, we’ll indemnify your losses if a customer fails to pay, whether that’s due to insolvency, refusal, or inability. We’ll also help you avoid bad debt and grow your organisation by informing your credit risk decisions through powerful insight on who to extend credit to and what limits to offer
Predicting risk is never easy, but you can avoid the domino effect that could happen when prices fluctuate with predictive intelligence and by protecting your accounts receivable with trade credit insurance.
To receive the latest economic and insolvency updates from our experts
Allianz Trade is the global leader in trade credit insurance and credit management, offering tailored solutions to mitigate the risks associated with bad debt, thereby ensuring the financial stability of businesses. Our products and services help companies with risk management, cash flow management, accounts receivables protection, Surety bonds, Business Fraud Insurance, debt collection processes and e-commerce credit insurance ensuring the financial resilience for our client’s businesses. Our expertise in risk mitigation and finance positions us as trusted advisors, enabling businesses aspiring for global success to expand into international markets with confidence.
Our business is built on supporting relationships between people and organisations, relationships that extend across frontiers of all kinds - geographical, financial, industrial, and more. We’re constantly aware that our work has an impact on the communities we serve and that we have a duty to help and support others. At Allianz Trade, we’re strongly committed to fairness for all without discrimination, among our own people and in our many relationships with those outside our business.
