Unions tell PM to ease fiscal rules and improve Brexit deal as stocks tumble

Union leaders have called on the Prime Minister to go further than the watering down of green targets for carmakers unveiled today, urging him to loosen fiscal rules and improve the UK’s Brexit deal as stocks tumble in the wake of Donald Trump’s tariffs.

Former New Labour minister Peter Hain also made a similar appeal to loosen fiscal restrictions “for these exceptional, and exceptionally dangerous, times”, while the IPPR think tank urged closer EU ties.

It has been less than a week since the US President sent global stock markets into freefall after announcing tariffs on almost every country in the world, including the UK.

Speaking from a Jaguar Land Rover plant in the West Midlands earlier this afternoon, Keir Starmer promised to back the car sector “to the hilt” after it was hit with 25% tariffs.

“Nobody is pretending that tariffs are good news. You know that better than anyone. 25% tariffs on automative exports. 10% on other goods.

“That is a huge challenge to our future. The global economic consequences could be profound.”

‘Relax self-imposed fiscal rules’

In response to the tariffs, Starmer watered down electric car vehicle targets, extending the timeline for phasing out petrol cars and giving luxury automakers an exemption. He also pledged to cut red tape to make manufacturing cars less expensive.

However, leading trade union chiefs have called on him to go further.

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While major affiliate union Unite’s general secretary Sharon Graham said the announcements were welcome, she urged the government to also relax its fiscal rules to allow more investment.

“In the wake of the US tariffs it is more important than ever that this government focuses on supporting UK manufacturing and defending jobs.

“While today’s announcement by the government on ZEVs and hybrids is welcome, it is not enough to reverse the damage being done to a UK automotive sector in crisis, which has already lost one plant and includes several others at high risk.

“We urgently need to look at additional measures such as VAT exemptions and if we can’t get a real jobs plan for the sector in time for 2030, we will need to go back to the 2035 deadline for all ICE vehicles.

“To generate growth and jobs for the future, UK manufacturing across the piece will also need reductions in industrial energy costs, protections for UK steel and a relaxation of self-imposed fiscal rules to allow more investment.”

‘The UK is badly exposed due to double-whammy of Brexit and tariffs’

Trades Union Congress general secretary Paul Nowak warned that working people must not pay the price for tariffs, as he called for a closer relationship with the EU.

“Acting quickly to secure a closer trading relationship with the EU was common sense before Donald Trump launched a global trade war – and it’s even more important now.“The UK economy has been hit by a double whammy of a botched Tory Brexit deal and Trump tariffs. This has left us badly exposed.

“It’s time for a new approach that honours the referendum result while giving us a much-needed trading reset with our closest neighbours to boost British jobs and manufacturing.”

However, the Prime Minister’s spokesman ruled out any plans on rejoining the customs union.

He added: “We do think we can have a better trading relationship with the EU.”

Meanwhile the Institute for Public Policy Research also weighed in behind Nowak’s calls for stronger EU ties.

Marley Morris, associate director at IPPR, said: “In response to the Trump administration’s tariff hikes, the government needs to double down on an ambitious trade strategy.  This means strengthening our trade defences, deepening our trading relationship with the EU, and pursuing free trade deals with other key partners.

“The government should also roll out a locally-driven programme of export support to help businesses to adapt to the new global trade landscape.”

Labour climate group says carmaker changes are ‘understandable’

There does not appear to have been significant pushback for now within Labour to the watering down of targets, however.

Paul McNamee, director of the Labour Climate and Environment Forum, said: “In such an unstable economic landscape, it is understandable for Labour to be tweaking rules to best support British industries. They are being absolutely clear that the future of vehicle manufacturing in the UK is an all-electric one.

“They have reversed Rishi’s decision and confirmed the 2030 ban on petrol and diesel vehicles. And the Prime Minister has stated that all-electric vehicles will be central to UK industry for years to come. The Chancellor and Prime Minister correctly identified that net zero and clean British energy are currently the greatest source of investment into the UK – and a vital part of the upcoming industrial strategy.

“We have known for a long time that electric vehicles and clean energy will be vital tools in the fight against climate change. But its now clear they will also help keep the UK more secure in a Trump-tariff world.”

SERA, Labour’s affiliated environment group, was also approached for comment.

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