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UK Prime Minister Keir Starmer held “productive” discussions about “an economic prosperity deal” on a call with US President Donald Trump Sunday evening ahead of a crunch week in which the government hopes to carve out exemptions from looming US tariffs.

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(Bloomberg) — UK Prime Minister Keir Starmer held “productive” discussions about “an economic prosperity deal” on a call with US President Donald Trump Sunday evening ahead of a crunch week in which the government hopes to carve out exemptions from looming US tariffs.

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A statement from Downing Street said the two leaders agreed that negotiations “will continue at pace this week” and that they will “stay in touch in the coming days.” 

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Washington is scheduled to unveil a series of reciprocal tariffs worldwide on Wednesday, branded “Liberation Day” by Trump, that would remake the global trading system. Economists say the move would hammer UK growth and could lead to tax increases in the autumn.

Trump wants to rebalance trade where he considers the US is being penalized, and may take non-tariff barriers such as taxes and regulations into account. Starmer has been working for months on strengthening White House relations and is considering cutting digital taxes on US tech firms to secure special treatment.

So far, the UK has had little success. Last week, Trump preempted “Liberation Day” by imposing 25% tariffs on car imports starting April 3, with further levies expected on goods from the UK, European Union and Canada. More on computer chips and pharmaceuticals may follow.

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The threat of new tariffs comes at the start of what may also prove a tricky week domestically as businesses face a double whammy of rising costs. Employers will be hit with a 6.7% increase in the National Living Wage on Tuesday and on Sunday a £26 billion ($33.6 billion) payroll tax rise comes into effect. Both were unveiled at the October budget, which sparked a backlash by firms.

The start of a global trade war would complicate Labour’s plans further by wiping out Chancellor of the Exchequer Rachel Reeves’ slim £9.9 billion budget headroom, the Office for Budget Responsibility said last week. To repair the damage to the public finances, she might have to raise taxes at the budget in autumn, economists say. 

UK officials are in “intense” talks with Washington to secure an exemption or reduction to tariffs, according to Home Secretary Yvette Cooper, who was speaking to Sky News on Sunday. She didn’t rule out the UK retaliating. “No option is off the table,” Cooper said. “The UK government will always act in the national interest.”

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Starmer and Trump also agreed on the call to keep up “the collective pressure” on Russian leader Vladimir Putin, the statement added. The comment came after Trump said he was “pissed off” with Putin for what appeared to be delaying tactics over a cease-fire deal with Ukraine. If Russia didn’t engage properly, Trump said he could impose “secondary sanctions” on Russian oil to prevent all sales.

Trump Threatens Russia Oil Penalties Citing Anger at Putin (2)

Separately, UK services exports hit a record £508 billion in 2024, official figures showed. Data from the Office for National Statistics confirmed the UK’s position as the second-largest services exporter globally after the US, according to a statement from the Department for Business and Trade. 

The figures “cement the UK’s status as a services superpower,” said Business Secretary Jonathan Reynolds, adding that services would be a priority in the government’s forthcoming industrial strategy. 

The ONS figures showed the value of UK services exports in current prices rose £36 billion from the previous year, and accounted for 58% of total UK exports. 

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