Keir Starmer is preparing to rethink key elements of the government’s economic policy in an emergency response to Donald Trump’s tariff blitz, amid growing concern in Downing Street that the US president’s trade war could do lasting damage to the UK.
The prime minister believes, say allies, that “old assumptions should be discarded” in the UK’s response, suggesting he and the chancellor, Rachel Reeves, may be preparing to raise taxes again – despite having promised not to do so – or even possibly change their “iron clad” fiscal rules to allow more borrowing and fire up economic growth at home in the event of recession.
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This week, Starmer, who has refused to criticise Trump or his tariffs directly, will focus on how to frame an economic response to a global economic shock that protects working people, and their incomes and jobs – as well as the UK’s public services.
He believes that the last few days have ushered in a “new era”, that the “world has changed” and that a global trade war risks “undermining a proud, hard-working nation”.
The kind of language now emanating from Starmer’s circles will be seen by economists – and politicians at Westminster – as preparing the ground for big potential shifts in economic policy on the basis that emergency times may require emergency measures.
Speaking on the BBC's Sunday with Laura Kuenssberg show, [Chief Secretary to the Treasury Darren] Jones was asked whether globalisation - which has resulted in a boom in imports of cheap fashion, electrical goods and other products - was over.
"Yeah it's ended, the prime minister said that himself this morning," he said.
The change meant the UK had to "build out" relationships with allies around the world but also invest in the UK's own economy, Jones said, denying ministers were "scrabbling" for solutions.
He insisted the government was "trying to get ahead of these challenges" , which he said were "why we have to invest in the domestic economy, both for UK businesses, but also our public services... which is why our plan for change is investing in the NHS and skills as well as industrial policy."
Amid reports both elements of the spending review and the industrial strategy could now be brought forward from their expected June publication date, he said Labour had been working on the industrial strategy since it was in opposition.
Pressed on whether they would be brought forward, Jones deferred to Sir Keir's announcement expected in the coming days and laughed when Laura Kuenssberg said "that sounds almost like a yes but you're not allowed to say it to us this morning".
The UK government is continuing its policy of not responding with counter-tariffs, as other countries have done, preferring a "calm" approach focused on a UK-US trade deal.
"We're hoping to do a deal," Jones said, adding on tariffs that "we have a better outcome than other comparable countries as a consequence of our diplomacy".
Damn, forgot this was the end and now I'm sad again. Going to miss this one.