Keir Starmer has announced sweeping measures to support the car and pharmaceutical industries, as he said Britain faced a “changing and completely new world” after Donald Trump’s tariffs.
The prime minister warned of an “age of insecurity” as stock markets tumbled for a third day after the US president announced blanket import taxes on countries across the world.
Speaking at the Jaguar Land Rover factory near Birmingham, Starmer said US tariffs – set at 10% for UK exports and 25% on cars – were a “huge challenge for our future and the global economic consequences could be profound”.
He defended the fiscal rules set by the chancellor, Rachel Reeves, in her October budget and said now was “the time to build on them” to ensure stability, but declined to commit to keeping them until the next election.
Starmer recommitted, however, to Labour’s manifesto pledge not to raise VAT, income tax or national insurance for employees until the end of this parliament.
He announced a watering down of the UK’s electric car targets, including allowing luxury car brands such as Aston Martin to continue manufacturing petrol cars beyond 2030 and for new hybrids to be sold for an extra five years until 2035.
And in a move designed to help the pharmaceutical industry, Starmer said he would slash red tape to allow the average clinical trial to be set up within 150 days rather than 250. He also announced a £600m investment in a health data research service in Cambridge.
Markets on Wall Street fell steeply as they opened on Monday before rallying, while in London the FTSE 100 hit its lowest level for a year.
Signalling further announcements in the coming days, Starmer said the measures he set out were a “downpayment” and a “statement of intent”. He vowed to “shelter British businesses from the storm” and told people concerned about the economic impact that “we’ve got your back”.
Asked about the future of British Steel’s Scunthorpe plant, which faces potential closure, the prime minister said all options were on the table. There have been calls for ministers to nationalise the plant.
Starmer said his commitment to the net zero agenda remained unshaken but that he was “not ideological” about it.
“There’s a global race on for the jobs of the future in relation to net zero. I don’t think now is the time to step away from that race,” he said, adding: “We’re not ideological, we’re pragmatic. If there’s flexibilities that help … of course we will take those steps.”
Pressed on whether he should be tougher with Trump and rescind the invitation for a second state visit, Starmer said it was “not in our interest to simply rip up that relationship”.
The prime minister told reporters in Solihull: “We’ve got to rise together as a nation to the great challenge of our age – and it is the great challenge – which is to renew Britain so we’re secure in this era of global instability.
“Let me be really clear, at a moment like this our future is in our hands, and so of course we will keep calm and fight for the best deal with the US, and we’ve been discussing that intensely over the last few days.
“But we are also going to work with our key partners to reduce barriers to trade across the globe, to accelerate trade deals with the rest of the world, and champion the cause of free and open trade right across the globe.”
