PRIME Minister Keir Starmer’s attempt to ride two horses at the same time, by forming trading relations or ‘partnerships’ with both the EU and the US, is courting a catastrophic economic disaster for the already bankrupt UK.
US President Trump’s threatened 25 per cent reciprocal VAT tariffs on all US steel imports will kill off the remnants of Britain’s shrinking domestic steel production and potentially shrink the UK economy by at least 24 per cent, according to Capital Economics.
President Trump vowed on Thursday to impose tariffs on countries that charge VAT, leaving Britain at risk of a £24bn blow to its economy.
Capital Economics said adding VAT and tariff rates together would impose levies of 24 per cent on UK goods entering the US.
The risk of higher tariffs is a blow to Prime Minister Sir Keir Starmer as he battles to ignite growth in Britain’s failing capitalist economy, which is flatlining near to zero, at just 0.1 per cent, in the final three months of last year.
The UK government meanwhile has indicated that it will be pleading to seek exemptions from tariffs being threatened on British steel entering the US.
Business Secretary Jonathan Reynolds told the BBC that the UK had a strong case to avoid the border taxes after Trump said the tariffs will be enforced on 12 March ‘without exceptions or exemptions’.
Reynolds’ comments also suggested that the UK would be reluctant to join potential retaliation by the EU to any further tariffs imposed by the US, arguing that ‘the UK national interest was best served by free trade’ – meaning that the UK bosses will have to get used to living on their knees!
In fact, Britain escaped being officially in recession by the skin of its teeth, in the dying months of 2024, as economic growth flatlined at 0.1 per cent after record tax increases by the Chancellor Rachel Reeves.
With headline GDP growth practically at zero, Starmer has said he wanted Britain to have the fastest growth in GDP per person – a measure of living standards which looks at the population as well as the economy’s overall size.
On this basis, Britain is going to do even worse. GDP per person fell by 0.1 per cent in the fourth quarter, following a 0.3 per cent drop in the previous three months, inflicting even more poverty on the working class.
In just six months, Labour has crushed confidence and driven the UK economy into a ditch!
Repossessions of rental properties in England and Wales hit another record high last year, according to the BBC, reaching more than 30,000.
The longer-term picture is spectacularly dire: GDP per person is now 1.1 per cent below its pre-pandemic level, reflecting five years without any sustained improvement in this critical measure of prosperity.
Retail sales shrank in the final quarter and manufacturing contracted by 0.7 per cent – before the effects of the employer National Insurance increase were felt.
The ‘foundations’ of future growth have also been undermined.
Business investment plunged by 3.2 per cent in the final quarter of the year, the sharpest drop since lockdown. Bosses’ confidence has been shattered by the shock tax raids in the Budget, and companies are slashing spending to cover those costs.
With the escalation of protectionist tariffs the world economic crisis is developing into a trade war which only the fittest will survive, while the fragile and bankrupt UK economy will go under, along with workers’ jobs and workers’ living standards.
This must be prevented. Workers must fight with occupations against closures and mass sackings.
They must force the TUC to call a general strike to bring down the Starmer government and set up a Workers Government, based on workers councils to bring in Socialism. This means the expropriation of the bosses and bankers, and bringing in a planned socialist economy, organised and run by the working class for the benefit of the working class with the once-ruling employing class abolished for all time!
