Trump’s car tariffs pile pressure on Reeves’ new economic plan

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UK Chancellor Rechael Reeves’ new economic plan is under immediate pressure after US President Donald Trump imposed 20 percent of the car tariff on Thursday.

The Reeves declared him in a few hours Spring statementThe possibility of a growing trade war has become a new threat to the “very small” £ 9.9bn headroom.

Richard Hughes, the head of the independent office for the budget responsibility, warned that a full -development global trade war could remove that headroom, and some economists have said that the Chancellor will be forced to raise taxes in his autumn budget.

“It represents the crystallization of one of the risks that was highlighted around our central forecast,” Hughes said on Thursday.

He said that in the worst situation where the United States has collected an additional 20 percent point tariff around the world and the UK revenge, “We will lose about 1 percent of GDP”.

Hughes said that the next year will be very much weight on growth – which OBR predicted to hit by 1.5 percent – and the moderate growth in the middle term would reduce 0.75 percent.

He told the BBC, “Hits in this type of economy can also damage the revenue.” “The influence of inflation will have its expenditure effect.

“This type of shock will be enough to remove $ 10 billion in the headroom.

The cars are about 10 percent of Britain’s export of goods to the United States.

Hughes warned that Reeve’s headroom was “a small part of the risk and push that could hit the UK economy in the next five years.”

He said that the UK’s domestic productivity outlook at the top of the tariff was a risk of the Chancellor that a warning that OBR could re -evaluate the consistently optimistic assessment of Britain’s growth.

“There are many uncertainty about the recent statistics and what they mean for the UK growth and workers’ output,” he said. “If the growth is only 0.1 percent per year in the next five years, it will be enough to remove that headroom.”

Hughes added that if interest rates have increased by 0.6 percent, then that headroom will be enough to delete. “This is a very small interval that we have seen against a set of financial motives in a world that may change from day to day.”

In his spring’s statement, Reeves announced Spending cut seriesIncluding a controversial £ 4.8bn decrease in welfare to fill £ 14 billion holes in public financing.

He finished the day with the £ 9.9bn headroom against his financial rules, just like he had left himself in his October budget, but was very small in the historical Tihasik criteria.

Many economists think that he may be forced to raise taxes after year Public financial In a further stable action and overnight against Trump, they can “shock” against them overnight.

The “ironclad” financial rule means that the current expenditure must be balanced at the end of the forecast period of 2029-30.

UK luxury car brands such as Jaguar Land Rover, Aston Martin and Bentley’s tariffs will be strictly hit as they do not produce any cars in the United States.

An automotive production expert who operates autonyalanes consultancy, says Ian Henry, some luxury brand dealers such as Rolls Royce and Bentley try to exploit higher tariffs by trying to cut margins in the United States or reduce the cost of coming to the United States.