1 week Ago By Heather Saul
John Maynard Keynes is often quoted as saying, “when the facts change, I change my mind”, during the Great Depression. But even he might have struggled to get away with that line in the face of a bemused and anxious electorate today, wondering why the story of reassurance, growth, limited tax rises and steady-as-we-go politics has suddenly been ditched by the Government in abrupt crisis mode.The impact of Donald Trump’s destructive global tariffs has left the Prime Minister, Chancellor and ministers pumping out “the world has changed” takes on the mega-shock, in the hope that the more specific and unwelcome domestic trade-offs land with less of a jolt in the weeks ahead.
In truth, this is the result of taking Trump’s threats of massive levies on imports seriously, but not literally. The record shows it might have been wise to prepare for things working out the other way round.This week, the PM will declare an “end to globalisation”, conceding that free trade has failed voters and enabled a reckless US President and acolytes across the world to impose massive charges on the way countries do business with each other.
In one sense, though, globalisation is going strong – it’s just the wrong kind for those who prize liberal free-trade order and its benefits for business, and the advantages of people being able to move and trade with ease across national borders. What is being “globalised” today are fake solutions to the problems of a workforce displaced by automation (and soon AI), with tariffs based on grievances and poor maths.if(window.
adverts) { window.adverts.addToArray({"pos": "inread-hb-ros-inews"}); }Yet, as Starmer pointed out, many people – from the Maga base across the US, to British voters fretting that prosperity is sliding backwards, to European countries dealing with a resurgence of parties blaming all social ills on migration – do not feel that they have benefited from the liberal “rules-based” order (another sacred cow of modern liberalism we will hear less of – including from Labour).
Moving from that admission to what one of his newer advisors delicately calls “a more credible solutions mode”, rather than just hoping for a big, beautiful deal that avoids rows about chlorinated chicken, will likely determine whether Keir-ism survives or flounders electorally.Even the 10 per cent “discount” against tariffs imposed by Trump on the “nasty” EU allows for a lot of instant damage to the UK. Many jobs will be affected, and so will the very employment chances the Government wants to boost in order to see fewer working-age people out of jobs and subsisting on whittled-down welfare.
A swathe of companies, starting with Jaguar Land Rover, emblematic of Britain’s luxury car market appeal, will halt deliveries to the US and figure out whether their businesses can survive the bespoke 25 per cent levy hit on their exports. Stock market valuations have cratered, killing off the deals and investment.#color-context-related-article-3627065 {--inews-color-primary: #5C909D;--inews-color-secondary: #EFF4F5;--inews-color-tertiary: #5C909D;} Read Next square POLITICS Starmer urges 'build British' and eases car climate target in response to tariffsRead MoreA trade deal with the US in these circumstances would be welcome, but still a skinny win for the UK.
Starmer has been closeted in Chequers, making calls with other European leaders, and Reeves has also been hitting the phone to expedite a trade deal with India (one of those “nearly-there” arrangements which never quite gets over the line).if(window.adverts) { window.
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adverts.addToArray({"pos": "mpu_tablet_l1"}); }But the Prime Minister and Chancellor are now admitting what has been apparent for the past couple of weeks: relying on good relations with an unpredictable president will not be enough to smooth the UK’s path through the tariff jungle.Plans to loosen a raft of regulations will be accelerated – on anything to do with electric cars and energy transition, for starters – and planning decisions will be rolled out faster over the heads of local opponents.
The price will be a reverse ferret on many things voters quite liked about Labour. The desire to tame the tech titans with bans on “legal but harmful” content on social media is being dropped, in order to avoid damaging a deal on digital services. A “review of all environmental regulation” and getting rid of regulations that “unlock growth” is strikingly different from the pledge on the government website last spring to create “a system that places environmental considerations at the heart of policymaking across government.
”One measure the Government does not (yet) want to talk about is unavoidable: a retreat on its pledges not to raise taxes for “working people”, a category which will turn out to exclude rather a lot of people who earn or have earned their living. The assault on the public finances from tariffs – directly and in slowing global trade – will be so severe that only so much can be gorged out of mini-raids like culling ISA tax-free entitlements. Voters with long memories might object that savings relief was brought in under Gordon Brown to increase the numbers of people on middle and lower incomes who were saving for their future.
A lot of what the Government will do and say from now will mean undoing things it did and said before.The big question is whether the “Trump amendment” to previous pledges works when the prospect of undisguisable tax rises becomes apparent. A more serious dividing line will emerge on whether higher taxation and pro-growth desires really work as well together as the Government hopes.
Harder questions will be asked about how beneficial a rapid Net Zero carbon emissions strategy is for the UK in these straitened circumstances. It’s fine to have “blue Labour” court philosophers talking about re-industrialisation, but so far, the “how” and “how much does it cost?” questions have gone unaddressed.A desire to be flexible in the wake of a shock to the system can fall into political incoherence – lots of pivots at the cost of a sense of direction.
The reasons given for changes of course and regrettable impacts on individuals will be “this is Trump’s world – we just live in it,” but that is an excuse, not a strategy. Voters might reasonably reply, “What makes you better at negotiating this world than another leader or party?” It is the start of another “Keir era” too – and the questions just got harder..
