Closing post
Time to wrap up
European stock markets have hit a two-week low, after Donald Trump announced a new 25% tariff on car imports to the US.
Automakers’ shares have been hit, with BMW down 2% in late-afternoon trading and Volkswagen 1.3% lower.
US manufacturers have fallen too – with General Motors falling 7%, as it will also face a tariff on cars manufactured outside the US and on imports of components.
UK chancellor Rachel Reeves has suggested Britain does not want to retaliate.
She told Sky News:
“We’re not at the moment in a position where we want to do anything to escalate these trade wars.
“We are looking to secure a better trading relationship with the United States,”
British Steel plans to close its two blast furnaces and steelmaking operations in Scunthorpe, putting up to 2,700 jobs at risk in a move unions called “devastating”.
The company, which is owned by China’s Jingye, said it would immediately start consultations with its workforce and unions on redundancies stemming from the planned closures alongside a reduction of steel rolling-mill capacity.
The closures affect between 2,000 and 2,700 workers out of a workforce of about 3,500, British Steel said, and will bring an end to steelmaking in Scunthorpe after 160 years of production.
Lower-income households are on track to become £500 a year poorer by the end of the decade as a result of the UK chancellor’s spring statement, according to analysis by a leading thinktank.
The Resolution Foundation said a combination of weak economic growth over the next five years and benefit cuts that fell disproportionately on lower-income households would result in an average annual loss of £500 in 2030 for those in the poorest half of the population.
Some pharmaceuticals firms are sending more medicines by air to the US than usual, in an attempt to front-run President Donald Trump’s 2 April tariffs announcement.
Two European-headquartered drugmakers told Reuters this week they are sending as much of their medicines across the Atlantic as possible over the past several weeks and heard other pharmaceuticals companies were doing the same.
Gaurav Ganguly, senior director for economic research at Moody’s Analytics, warns that the consequences of the new US car tariffs are significant:
“A number of European countries are in the immediate firing line, including Sweden and Germany. If the policy remains in place, the consequences for consumer confidence and employment in the auto sector and beyond are severe.
European, Japanese, South Korean and Chinese manufacturers all face plummeting demand from U.S. buyers. While the stated intention is to use tariffs to raise revenue for tax cuts, this is unlikely to happen if U.S. consumers don’t buy tariffed products. For automakers, offering deep discounts to these consumers might offer some short-term relief but is clearly unsustainable, while this degree of policy volatility makes it harder to shift production to the U.S. with confidence.”
Jess Ralston, analyst at the Energy and Climate Intelligence Unit (ECIU) has argued that jobs didn’t have to be at risk in Scunthorpe:
“Job losses are devastating for anyone, but particularly in a community like Scunthorpe that relies heavily on the steelmaking industry. It did not have to be this way. While steel production in the UK has been declining since the 1970s, long before climate commitments, China has been ramping up its production and undercutting other manufacturers across the world. A phased transition to the steel industry of the future, including hydrogen, could have kept these jobs in communities that need them.
Clearly, we cannot afford to stick to the status quo. The EU recently published its Steel Action Plan and countries like the US are making moves to ensure they have a steel industry thats able to go green as the rest of the economy does. Many in Scunthorpe will be worried about their jobs, wondering what our long-term plan is, and whether we’ll be able to compete with the rest of the world for this industry of the future.“
Trade Secretary Jonathan Reynolds has declined to rule out changing taxes on major tech firms in exchange for exemptions from US tariffs, but insisted they would pay “a fair amount of tax”.
Speaking at a trade conference hosted by Chatham House, Mr Reynolds suggested ministers were willing to discuss the digital services tax (DST) with their US counterparts.
Reynolds explained:
“We have always been of the view as a country that this has to be something ideally agreed on an international basis, but it’s not that DST has been put in place as something that can never change or we can never have a conversation about it.”
Last night’s announcment about US car tariffs has also hurt the Mexican peso.
The Mexican peso has weakened by around 0.9% to around 20.29 per U.S. dollar.
In other moves, the Canadian dollar fell 0.31% to C$1.43 per dollar.
Airline travel between Canada and the US is “collapsing” amid Donald Trump’s tariff war, with flight bookings between the two countries down by over 70%, newly released data suggests.
According to data from the aviation analytics company OAG, airline capacity between Canada and the US has been reduced through October 2025, with the biggest cuts occurring between the months of July and August, which is considered peak travel season. Passenger bookings on Canada to US routes are currently down by over 70% compared to the same period last year.
Comparing the available bookings from March 2024 to March 2025, OAG looked at how many people have booked trans-border flights in the six-month period between April through September. It found that the number of tickets booked is down anywhere from 71% to 76%.
Is this real? I can't believe it.
— Noor Al 📈 (@NoorAlTrades) March 26, 2025
These are forward flight bookings from Canada to the US.
This might be the single craziest thing I've ever seen. pic.twitter.com/wDrU7tqReX
US car makers' shares fall
Over on Wall Street, US auto makers have joined the global selloff in car companies.
General Motors has dropped 6.3% in early trading, the worst-performing company on the S&P 500 index, while Ford are down 2.5%.
That follows losses in Europe earlier today, where Stellantis (whose brands include Jeep and Dodge, alongside Fiat and Citreon) have fallen 5.7% today, and BMW has lost 3%.
Traders are concluding that the new 25% tariff on cars, and imported auto parts, will hurt the US car industry.
GM, Ford, and Stellantis build vehicles in Canada, Mexico, and China, and would also face higher production costs due to tariffs’ effect on the auto supply chain.
Jobs are also at risk at Sky.
The broadcast is cutting about 2,000 jobs, in a push to replace more of its traditional call centre roles with online and AI-guided services.
Sky is to close three of its 10 customer service sites — in Stockport, Sheffield and Leeds — and scale back two others.
Downing Street said the Government had made a “generous offer” to British Steel, ahead of its decision to propose closing steelmaking in Scunthorpe.
The Prime Minister’s official spokesman said:
“We’ve made a generous offer to British Steel designed to deliver a sustainable future for staff, industry and the local community… we’ve got a two and half billion pound plan to rebuild the sector.
“We will continue to work with British Steel and with the company’s owners to secure its future and deliver on a good outcome.
“But we’ve made that offer and that’s obviously up to the company involved.”
As flagged earlier, there are reports that Jingye Group turned down a £500m offer of support.
Mexico faces the biggest economic impact from Donald Trump’s car tariffs, according to analysis from consultancy Capital Economics.
They have examined which countries export most autos to the US as a share of their own GDP. Mexico and Slovakia appear very heavily exposed, with these exports accounting for 4 to 6% of GDP. Shares for Korea, Canada and Japan are 1 or 2%.
However, to get a better picture, they’ve also examined the “domestic value added dependent on exports of autos and parts to the US”, which strips out the impact of components bought overseas (eg, if a German carmaker used parts imported from Slovakia, the value added by Slovakia should be excluded)
On this basis, Mexico is still most vulnerable, but with a smaller 1.6% of its GDP at risk, followed by Slovakia, Korea, Hungary, Japan, Canada and Germany.
Capital Economics also suggest the tariffs could benfit the US auto sector, or they might simply hurt demand.
US vehicle sales totalled 16 million in 2024, of which about eight million were imported. The low level of US capacity utilisation in the vehicle sector suggests that there is scope for domestic production to rise to offset lower imports.
If capacity utilisation returned to its prior peaks, that would be consistent with a rise in vehicle assemblies of three million. That said, the big risk is that higher prices will cause consumers to reduce demand rather than switch to domestic suppliers, and there will be other constraints on production in the short term such as a lack of workers.
We also have confirmation that Donald Trump inherited a solidly growing economy.
US GDP rose by 2.4%, on an annualised basis, in October-December, new data shows, slightly higher than the previous estimate of 2.3%.
This equates to growth of 0.7% in the quarter, faster than the eurozone (which grew by 0.2%) and the UK (which grew by 0.1%).
The yield, or interest rate, on UK government bonds has risen today as investors digest yesterday’s Spring Statement.
10-year gilt yields are up 6 basis points, or 0.06%, to 4.784%, towards the 16-year high over 4.92% set in January. Long-dated 30-year gilt yields are up too, at 4.362%.
Yields rise when bond price fall, and measure the government’s cost of borrowing.
US government bond yields are also up today, but European borrowing costs are lower.
The fiscal plans outlined yesterday showed borrowing would be higher than previously forecast over the next five years:
Our March 2025 borrowing forecast #SpringStatement pic.twitter.com/jvXegB4VPR
— Office for Budget Responsibility (@OBR_UK) March 27, 2025
Rising bond yields adds to the UK’s fiscal challenges, as it pushes up the cost of borrowing.
And if the UK’s economy performs worse than expected (perhaps due a trade war), tax receipts could be lower, meaning pressure to borrow more.
Yesterday, the UK’s Debt Management Office (DMO) outlined how it will issue £299bn of gilts this financial year, to cover maturing debt and new borrowing. That’s slightly lower than the £305bn forecast.
Evem so, analysts at Morgan Stanley have warned that “the path ahead looks fraught”, telling clients:
The headroom was restored, the gilt remit was kept just under £300 billion, and the share of longs [longer-dated gilts] was lower than even our below-consensus forecast.
And yet...the consolidation was back-loaded. Fiscal buffer is modest. Risks to growth are skewed to the downside. The path ahead looks fraught - although on current forecasts, it is a path of a meaningful fiscal consolidation.
Reynolds talk interrupted by pro-Palestinian protesters
Business and trade secretary Jonathan Reynolds has been interrupted by pro-Palestinian protesters calling for an end to the sale of F35 jet parts to Israel, PA Media report.
At the start of Mr Reynolds’ appearance at a conference on trade hosted by the think tank Chatham House, a demonstrated shouted:
“This man and his government are complicit in genocide.
“The F35s are massacring Palestinian children. They have not stopped the trade of F35s.”
After the protester was removed from the event, Mr Reynolds said:
“We have suspended arms exports to Israel.
“We have not suspended F35s because they are integral to our national security and the defence of Ukraine, and people will know the supply chain for the F35 means they cannot be isolated to one country.
“That decision was laid out very clearly in Parliament, so I’m quite happy if he wants to ask a question rather than jump on stage to have that engagement with him.”
He was then interrupted by another protester waving a Palestinian flag and calling for an end to F35 exports, who was subsequently removed.
Updated
The proposed closure of the Scunthorpe blast furnaces is another big issue in Jonathan Reynolds’s in-tray, as the business secretary also faces the threat of a US trade war.
Reynolds has insisted today that he will work with British Steel’s owners, Jingye, over the plant’s future, saying:
“I know this will be a deeply worrying time for staff and, while this is British Steel’s decision, we will continue working tirelessly to reach an agreement with the company’s owners to secure its future and protect taxpayers’ money.
“We’ve been clear there’s a bright future for steelmaking in the UK.
“We’ve committed up to £2.5 billion to rebuild the sector and will soon publish a plan for steel setting out how we can achieve a sustainable future for the workforce, industry and local communities.”
UK Steel: This is a gut punch to UK steelmaking
Trade body UK Steel has warned that Britain’s national security would be threatened if steelmaking ceased in Scunthorpe.
🚨
— Ed Conway (@EdConwaySky) March 27, 2025
The Chinese owners of British Steel say they are now considering shutting their blast furnaces and end steelmaking at Scunthorpe in early June - only a few months away.
It would mean an end of virgin steelmaking in the country that invented it during the industrial revolution
UK Steel Director General, Gareth Stace, said:
“The proposal to close iron and steelmaking at Scunthorpe marks a heartbreaking and pivotal moment for our sector. It is a shocking blow to the 3,400 workers, our sector and to the whole community in Scunthorpe. This gut punch to UK steelmaking will have a profound impact, felt throughout the British economy.
“All options should be on the table, and we need a secure future for our steel industry. The end of steelmaking at British Steel would mean we have a major gap in capacity to meet the future demand of the nation and will be an irreparable break in the armour of national security.
“This devastating decision will cause untold disruption and damage to our supply chains, threatening jobs, businesses and the nation’s economic strengths. The steel industry is officially in a crisis. UK Steel has been sounding the alarm. Government must get back to the negotiating table to urgently stop the lifeblood draining from our sector and take action to rebuild the steel industry.”
Unite: his is a disgrace
The Unite union have condemned British Steel’s proposal to close its Scunthorpe blast furnaces, accusing the company of trying to blackmail the government into providing more financial support.
Unite general secretary Sharon Graham said:
“This announcement of job losses is quite simply a disgrace. British Steel is guilty of trying to hold the government to ransom, while using its dedicated workforce as pawns.
“In discussions with Unite, the government has clearly moved and has made an offer to invest heavily in British Steel (Jingye). This offer comes with long-term job guarantees, anything less would be a complete misuse of taxpayers’ money. British steel now needs to make the necessary commitments.
“British Steel must now withdraw its job threats and work with the government and Unite on a sustainable way forward which is in the best interests of the workers, their communities and the wider economy.
“The UK has the opportunity of becoming a leader in green steel and British Steel should be at the forefront of that transformation.”
British Steel proposes closure of Scunthope blast furnaces
Newsflash: British Steel is proposing to close its steelmaking operations in Scunthorpe, with the loss of up to 2,700 jobs.
It has just launched a consultation on the proposed closure of its Scunthorpe blast furnaces, rod mill and steelmaking operations in the Lincolnshire town.
British Steel says it has not been able to reach an agreement with the UK government for support to keep the plant running, and to allow future investment in Electric Arc Furnace (EAF) technology, which is more environmentally friendly than traditional furnaces.
Three options are under consideration:
Closure of the blast furnaces, steelmaking operations and Scunthorpe Rod Mill by early June 2025
Closure of the blast furnaces and steelmaking operations in September 2025
Closure of the blast furnaces and steelmaking operations at a future point beyond September 2025
The proposed closures will impact between 2,000 and 2,700 jobs, says British Steel, which is owned by Chinese industriall group Jingye.
British Steel CEO, Mr Zengwei An, says:
“We understand this is an extremely difficult day for our staff, their families, and everyone associated with British Steel.
“But we believe this is a necessary decision given the hugely challenging circumstances the business faces.
“We remain committed to engaging with our workforce and unions, as well as our suppliers and customers during this time.”
British Steel says it will continue to work with the UK Government to explore options for the future of the business.
Sky News reported earlier this week that Jingye had rejected a £500m offer from the government, to help British Steel’s transition to green steel production.
UK-based manufacturers might be able to pass on the impact of tariffs onto their wealthy customers, which would cushion the impact of the latest levies.
My colleague Jasper Jolly looked at this issue in January, and reported:
About 10% of UK car exports go to the US, although the majority go to the EU, according to the Society of Motor Manufacturers and Traders, a lobby group.
One small silver lining for the UK may be that a large number of those exports from companies such as the Jaguar and Land Rover owner JLR, the BMW-owned Rolls-Royce or the Volkswagen-owned Bentley, are classed as luxury vehicles, with prices that can start at £100,000 and rise to multiples of that. Those companies should be able to pass on the cost of tariffs to wealthier customers without denting sales.
BCC: Tariffs will sap business confidence and hurt UK manufacturers
The British Chambers of Commerce has warned that the new 25% tariff on car imports to the US will hurt business confidence.
The BCC says the impact on the UK car sector “cannot be overstated”, given the importance of the US market for British manufacturers.
William Bain, BCC head of trade policy, explains:
“Businesses were already looking with trepidation towards next week’s planned reciprocal tariffs before this fresh upheaval was announced.
“Around half of the cars purchased in the US are imported so this will pass through into much higher costs for US consumers. If fully extended to all components it will affect supply chains too.
“The impact of this on the UK car industry cannot be overstated. Cars are the UK’s biggest goods export to the US, with £6.4bn in sales in 2023, led by iconic manufacturers such as Aston Martin, Jaguar, and Land Rover.
“Piling these tariffs on top of the others already expected on 2 April, will sap business confidence and add further uncertainty for both UK and US firms.
“We urge the UK Government and the US Administration to continue intensive dialogue over the coming days and weeks to reach a mutually beneficial agreement on technology and trade.
“This needs to provide certainty for business and consumers alike on the future tariff landscape and remove unnecessary levies already in place.”
Kathleen Brooks, research director at XTB, reports that tariffs are “dominating market sentiment”, as investors calculate the impact of the trade dispute:
European stocks have opened sharply lower after President Trump announced a 25% levy on imports of cars and car parts coming into the US. This news has had an immediate effect on share prices, the US imports 8 million cars a year and untold car parts, which equates to $240bn in trade.
Unsurprisingly, the biggest decliners on the Eurostoxx index include Ferrari, Volkswagen, BMW and Mercedez Benz Group.
There’s also plenty of speculation today that Rachel Reeves may need to make tax rises in the autumn statement, if the UK’s fiscal position worsens.
Goldman Sachs has warned there are “further fiscal pressures ahead” that could squeeze the chancellor’s headroom against her fiscal targets.
Goldman analyst James Moberly told clients:
We think that the OBR will ultimately downgrade its trend growth forecast by around 0.2pp, possibly in the Autumn, which could reduce headroom by around £14bn, and we expect increasing pressure for the government to raise defence spending above 2.5% in the current Parliament.
If these pressures do materialise, we continue to think that tax changes are the most likely response. That said, we do think that lower interest rates could ease some of the pressure on the fiscal position as we expect the Bank of England to cut further than the market expects.
Richard Hughes, head of the independent Office for Budget Responsibility, has warned that the car tariffs announced by Donald Trump will eat into Rachel Reeves’s fiscal headroom.
Speaking to Radio 4’s Today programme, Hughes also flagged that a full-blown global trade war could eliminate that headroom altogether.
He explained:
“This represents the crystallisation of one of the risks that we highlighted around our central forecast, which was one of escalating global trade tensions.”
“The UK exports, in terms of goods to the US, around 2% of GDP. Car exports are about 10% of that.
“So that’s affecting directly UK goods exports of around 0.2% of GDP. So what Trump’s announced overnight is not the whole of that worst-case scenario, but it’s elements of it, and it’s the beginning of that risk side.”
The OBR presented three trade war scenarios yesterday – the worst, where the UK and US hit each other with reciprocal tariffs, showed 1% would be wiped off UK GDP.
We’re not there yet, though, with Reeves arguing against escalating the trade war this morning.
Next has rung up £1bn in annual profits for the first time but warned of growing risks to the UK economy, saying big business could not afford to finance “excessive regulation” and government debt.
The retailer said pre-tax profits rose 10% to just over £1bn, before one-off items including a £15m pension charge, in the year to January after sales rose 8.2% to £6.3bn, led by strong overseas growth and sales of other brands.
Simon Wolfson, the chief executive of Next, said he now expected to make £1.06bn next year, £20m more than previously expected, as he said the first eight weeks of the new financial year had been “ahead of our expectations”.
Wolfson, who is a Conservative peer, said: “We are as positive about the company today as we were [a year ago], albeit in an environment where the risks to the wider UK economy are growing.
Next’s shares have jumped over 5%, to the top of the FTSE 100 leaderboard.
Britain’s car sector is calling for more government support, after reporting another fall in output.
UK car and commercial vehicle production declined by 11.6% in February, to 82,178 units, according to new data from the Society of Motor Manufacturers and Traders (SMMT).
The SMMT blames a range of factors, including “soft markets at home and overseas, model changeovers and plant restructuring”.
Mike Hawes, SMMT chief executive, said,
“These are worrying times for UK vehicle makers with car production falling for 12 months in a row, rising trade tensions and weak demand.
The market transition is not keeping pace with ambition and, while the industry can deliver growth – and green growth at that – it needs policies to deliver that reality. It was disappointing, therefore, to hear a Spring Statement that did nothing to alleviate the pressure on manufacturers and, moreover, confirms the introduction next month of additional fiscal measures which will actually dissuade consumers from investing.
Without substantive regulatory easements our manufacturing viability remains at risk and the UK’s transition to zero emission mobility under threat.”
And on the new auto tariffs, Hawes has urged the UK and US governments to “come together immediately and strike a deal that works for all”.
SMMT chief executive Mike Hawes urged the UK and US governments to "come together immediately and strike a deal that works for all" https://t.co/OtG0XrtJtt
— SMMT (@SMMT) March 27, 2025
European stock markets fall amid tariff gloom
European stock markets are sea of red in early trading, dragged down by the auto sector.
Germany’s DAX index has dropped by 1.6%, with Mercedes-Benz (now -5.5%) and Porsche (-4.8%) leading the fallers.
France’s CAC has lost 1.1%, dragged down by Stellantis (now -6%).
The gloomy mood has also reached London, where the FTSE 100 index (which doesn’t contain any carmaker) is down 0.6%, or 52 points, at 8637 points.
Mohit Kumar of investment bank Jefferies explains:
Tariff concerns returned to the market with Trump imposing 25% tariffs on Auto imports and suggesting reciprocal tariffs to come.
Comments from trading partners overnight suggest potential counter tariffs will be likely. Tech stocks were under pressure on reports that China would use energy efficiency rules to limit use of high-end imported chips.
European car giant Stellantis’s shares have fallen over 5% in early trading.
BMW, VW, Mercedes-Benz shares all sliding
German carmakers are being rocked by the announcement of new auto tariffs at the US border too.
Shares are being hit in early trading in Frankfurt, where BMW are down 4.2%, Volkswagen has lost 3.3%, and Mercedes-Benz has dropped 4.1%
Jochen Stanzl, Chief Market Analyst at CMC Markets, says Donald Trump’s new tariffs will “significantly worsen the situation for German car manufacturers”, writing:
The European Union is now tasked with negotiating preferences, whereby only the portion of each vehicle not manufactured in the U.S. will be subject to the tariff. However, not all manufacturers will succeed equally in these negotiations, and it’s quite possible that certain vehicles may no longer be available in the U.S. market due to lost competitiveness. Further complicating matters is the looming implementation of tariffs on auto parts in May, which will only exacerbate the challenges faced by automakers.
The new tariffs will significantly worsen the situation for German car manufacturers, whose profits have already taken a substantial hit. The U.S. is a crucial trading partner; for instance, 80% of Volkswagen’s car sales in the U.S. are imports, while for Mercedes-Benz, this figure exceeds 60%, and for BMW, it is about 50%. One can only hope that Trump will use these tariffs as leverage to negotiate a better deal.
Shares in UK luxury carmaker Aston Martin have tumbled over 6% at the start of trading in London, to what looks to be a record low.
Updated
Reeves: trade wars are no good for anyone
Rachel Reeves has declared that the UK is not planning “at the moment” to introduce retaliatory tariffs on the US, and does not want to escalate a trade war with Donald Trump.
Speaking to broadcasters this morning, the chancellor said Britain is working intensely with Washington to secure an exemption from tariffs
She told Sky News:
“We are not at the moment in a position where we want to do anything to escalate these trade wars.
Trade wars are no good for anyone.”
Reeves has also told the BBC that an escalation of tariffs would be bad for Britain “but it would be bad for the U.S. as well, and that’s why we are working intensely these next few days to try and secure a good deal for Britain.”
Keir Starmer’s government had hoped to avoid being entangled in a trade war with the US, as trade between the two countries appears broadly balanced.
Yesterday, the Office for Budget Responsibility showed that a full-scale, tit-for-tat, trade war could knock 1% off the size of the UK economy.
That would firmly upend the latest forecasts for UK growth, and borrowing.
GM and Ford shares hit
Shares in US carmakers fell in after-hours trading last night too, after Trump’s announcement.
General Motors has fallen by 6.2%, and Ford has lost 4.7%.
The new US tariffs will apply all cars made outside of the US, and certain car parts too, so they will have a wide impact on the auto sector, and could badly hurt profits.
Estimates of cost increases from new tariffs are in the thousands of dollars per new car. Higher costs could turn into higher prices, destroying demand for new cars, or they could eat into profit margins.
Any impact would be uneven, though. The Chevy Equinox is made in Mexico. The Toyota RAV4 is built in Ontario, Canada. The Ford Escape is made in Kentucky. It isn’t easy to untangle 30-plus years of free trade.
Updated
Germany’s economy minister Robert Habeck has called for the European Union to deliver a firm response to Donald Trump’s new 25% tariff on imported cars.
In a statement, Habeck says:
“What counts now is to have a firm response to these tariffs from the EU. It needs to be clear that we will not take this lying down.”
Carmaker shares slide after Trump tariff announcement
Shares in Asia-Pacific car companies have fallen after Donald Trump announced plans to impose sweeping 25% tariffs on cars from overseas last night.
The latest eruption in the Trump Trade Wars has hit investor confidence, and angered US trading partners around the world.
In Japan, shares in Toyota Motor have lost 2.04%, Honda Motor fell fell 2.48% while Nissan Motor slipped 1.68% – which all helped to pull the Nikkei index down 0.6% today.
In South Korea, Hyundai Motor’s shares have fallen over 4% – just days after it tried to placate Trump by announcing a $21bn investment in the US.
The European Commission president, Ursula von der Leyen, has described Trump’s move as “bad for businesses, worse for consumers”.
Trump has also threatened further tariffs if the EU worked with Canada “in order to do economic harm to the USA”, which may fuel fears of a tit-for-tat trade conflict that would hurt the global economy.
Writing on his own social media platform, Truth Social, he said if they did so, “large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!”
Updated
Introduction: Lower-income families set to become £500 a year poorer
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
As the dust settles after yesterday’s spring statement, analysis shows that lower-income households are set to become £500 a year poorer over the current parliament.
The Resolution Foundation has been crunching the data since Rachel Reeves updated us on the nation’s finances, and concluded that poorer households will be most affected by the various tax and benefit changes in this Parliament.
Over the next five years, the average income across the poorest half of working age households is projected to decline by three per cent, or £500. That has only happened before during the early 1990s recession (1989 to 1994-95) and the financial crisis (2007-08 to 2012-13).
Ruth Curtice, Chief Executive of the Resolution Foundation, says:
“High debt servicing costs, weak tax receipts, and the need to reassure jittery markets, meant the Chancellor had to announce tax rises or spending cuts in her Spring Statement.
“She chose to focus the bulk of her consolidation on welfare cuts. These cuts have been justified on the basis of getting people into work, but it is questionable how much of a jobs boost they’ll deliver. After all, the bulk of the cuts are to disability benefits which aren’t related to work, and the cuts take effect from 2026, three years before the Government’s employment support programme kicks into gear.
“While the OBR’s outlook for growth today got gloomier, it is far more optimistic about Britain’s medium-term economic prospects. The Chancellor will hope that reality catches up with the OBR, rather than the OBR falling back to reality, otherwise more tough choices await.
“The outlook for living standards remains bleak. Britain’s poor economic performance, combined with policies that bear down hardest on those on modest incomes, mean that 10 million working-age households across the bottom half of the income distribution are on track to get £500 a year poorer over the course of the Parliament.”
Yesterday the chancellor announced welfare cuts of £4.8bn, with official figures showing that three million households could lose £1,720 a year in benefits. That could yet lead to a rebellion among Labour MPs when it comes to a vote…
…especially as Resolution Foundation have calculated that the £4.8bn welfare savings are actually built on £8.1bn worth of cuts.
They explain:
The full scale of welfare cuts are far greater than the net £4.8 billion savings. After accounting for the £1.9 billion boost to the standard rate of Universal Credit (UC), and the ‘gain’ from not going ahead with scored-but-never-implemented changes to the Work Capability Assessment, cuts to ill-health, disability and carer’s benefits rise to £8.1 billion in 2029-30, and will continue to grow over time.
Economists are also concerned that Reeves has not left herself very much headroom to hit her fiscal targets – any slippage could force her to consider tax rises.
The risks to the economy were amply demonstated by Donald Trump last night, as he announced new 25% tariffs on cars from overseas.
The agenda
8.30am GMT: Bank of England policymaker Swati Dhingra speaks on a panel in South Africa
9am GMT: Resolution Foundation event assessing the Spring Statement
10.30am GMT: Institute for Fiscal Studies press conference on the Spring Statement
12.30pm GMT: Updated US Q4 GDP report.
12.30pm GMT US weekly jobless claims
