The landscape has shifted, remarked the chancellor — and just hours later, it shifted yet again.
This phrase has become increasingly common in Westminster over recent days, serving as the rationale behind the new priorities and spending reductions that Rachel Reeves unveiled in her Spring Statement.
When government officials proclaim that the world has changed, they are implying, at least partially, that Donald Trump is back in the Oval Office, leaving them uncertain about what may come next.
In the latest instance of performance and policy blending seamlessly for America’s president, he announced during a news briefing that Washington plans to impose a 25% import tax on all vehicles purchased from abroad.
For the UK, the US ranks as the second-largest market for car exports, following the EU, as reported by the Society of Motor Manufacturers and Traders.
After more than two months into Trump’s second term, the UK government’s strategy has been to engage in private discussions while minimizing public statements.
Colloquially, one might summarize the approach as “If in doubt, say nothing,” carefully avoiding comments that might provoke Trump’s wrath.
In parallel, negotiations have been underway to establish a US-UK trade agreement, which could offer some protection against Trump’s unpredictable actions.
However, this highlights that uncertainty has become the new norm, consuming significant resources within the government as they prepare for potential developments and seek to navigate or mitigate anticipated changes.
The independent economic forecaster, the Office for Budget Responsibility (OBR), is tasked with the nearly impossible job of making economic predictions amidst such turbulent uncertainty, yet they make an attempt.
With a touch of understatement, the OBR states in its most recent economic and fiscal outlook, released alongside the chancellor’s Spring Statement, that “following the election of a new US administration in November, US trade policies and those of its major trading partners remain in flux.”
You could say that again.
Across five pages, the OBR examines various scenarios following a 20 percentage point increase in tariffs by the US.
They begin with countries other than the UK, then include all countries including the UK, and finally address all countries including the UK under the condition that those nations impose equivalent tariffs on US goods.
Turn to page 40 here to read it for yourself.
The most severe outcome, involving retaliatory measures, according to the forecaster, “would almost entirely eliminate the headroom against the fiscal mandate,” essentially undermining all the budgetary balances and compromises that Reeves has been managing in recent weeks.
Goodness.
For this reason and many others, ministers will be eager to avoid any scenario resembling this one.
All of this is occurring just days before what Trump has labeled “Liberation Day” next Tuesday, when a significant increase in tariffs is expected.
The world has changed, and it continues to evolve.
