The ‘tricky balancing act’ facing Starmer over US trade deal – and the real challenge to come
If you want a very visual representation of the challenges of transatlantic diplomacy in 2025, look no further than Oslo City Hall.
Its marbled mural-clad walls played home to a European military summit on Friday.
In December – as it does every year – it will host the Nobel Peace Prize ceremony. It’s an award Donald Trump has said he deserves to win.
But while the leaders gathering in the Norwegian capital may not say it publicly, they all have a very different perspective to the US president on how to win the peace – particularly when it comes to Ukraine.
Sir Keir Starmer at a summit in Oslo. Pic: PA
So far, Sir Keir Starmer has managed to paper over these foreign policy gaps between the US and Europe with warm words and niceties.
But squaring the two sides off on trade may be more difficult.
The US-UK deal announced on Thursday contained no obvious red flags that could scupper deeper trade links with the EU.
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PM defends UK-US trade deal
However, that’s in part because it was more a reaction and remedy to Mr Trump’s tariff regime than a proactive attempt to meld the two countries together.
Laced with party-political venom, yes, but the Tory leader Kemi Badenoch is getting at something when she says this agreement is “not even a trade deal, it’s a tariff deal and we are in a worse position now than we were six weeks ago”.
There may be more to come though.
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How good is the UK-US deal?
The government will talk up the possible benefits, but there are risks too.
Take the Digital Services Tax – much hated by the Trump White House as an unfair levy on US tech firms.
Despite the apparent pitch-rolling from the government, that was left untouched this week.
But asked to rule out changes in the future, the prime minister was non-committal, simply saying the current deal “doesn’t cover that”.
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For trade expert David Henig, the potential flashpoints in the transatlantic Venn diagram Downing Street is trying to draw around food standards, digital regulation and services.
“It is a tricky balancing act, at this stage it looks like the UK will go more with the EU on goods regulations, but perhaps a little bit more with the US on services regulations,” he said.
For veterans of the post-2016 Brexit battles, this may all sound like Labour embracing the Boris Johnson-era mantra of “cakeism” – or trying to have it both ways.
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It’s ironic indeed, given Sir Keir is a politician who supported the Remain campaign and then called for a second referendum.
But what matters now is what works – not for Downing Street but for the swathes of voters who have abandoned Labour since they took office.
That’s why the prime minister was once again trying to humanise this week’s trade deals.
These are agreements, he said, that would be measured in the “many thousands of jobs” they would safeguard across the country.
That’s the real challenge now, taking the work done in the marbled halls of the world’s capitals and convincing people at home why it matters to them.
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There is “no doubt” the UK “will spend 3% of our GDP on defence” in the next parliament, the defence secretary has said.
John Healey’s comments come ahead of the publication of the government’s Strategic Defence Review (SDR) on Monday.
This is an assessment of the state of the armed forces, the threats facing the UK, and the military transformation required to meet them.
Prime Minister Sir Keir Starmer has previously set out a “clear ambition” to raise defence spending to 3% in the next parliament “subject to economic and fiscal conditions”.
Mr Healey has now told The Times newspaper there is a “certain decade of rising defence spending” to come, adding that this commitment “allows us to plan for the long term. It allows us to deal with the pressures.”
A government source insisted the defence secretary was “expressing an opinion, which is that he has full confidence that the government will be able to deliver on its ambition”, rather than making a new commitment.
The UK currently spends 2.3% of GDP on defence, with Sir Keir announcing plans to increase that to 2.5% by 2027 in February.
This followed mounting pressure from the White House for European nations to do more to take on responsibility for their own security and the defence of Ukraine.
The 2.3% to 2.5% increase is being paid for by controversial cuts to the international aid budget, but there are big questions over where the funding for a 3% rise would be found, given the tight state of government finances.
While a commitment will help underpin the planning assumptions made in the SDR, there is of course no guarantee a Labour government would still be in power during the next parliament to have to fulfil that pledge.
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From March: How will the UK scale up defence?
A statement from the Ministry of Defence makes it clear that the official government position has not changed in line with the defence secretary’s comments.
The statement reads: “This government has announced the largest sustained increase to defence spending since the end of the Cold War – 2.5% by 2027 and 3% in the next parliament when fiscal and economic conditions allow, including an extra £5bn this financial year.
“The SDR will rightly set the vision for how that uplift will be spent, including new capabilities to put us at the leading edge of innovation in NATO, investment in our people and making defence an engine for growth across the UK – making Britain more secure at home and strong abroad.”
Sir Keir commissioned the review shortly after taking office in July 2024. It is being led by Lord Robertson, a former Labour defence secretary and NATO secretary general.
The Ministry of Defence has already trailed a number of announcements as part of the review, including plans for a new Cyber and Electromagnetic Command and a £1bn battlefield system known as the Digital Targeting Web, which we’re told will “better connect armed forces weapons systems and allow battlefield decisions for targeting enemy threats to be made and executed faster”.
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PM Sir Keir Starmer and Defence Secretary John Healey on a nuclear submarine earlier this year. Pic: Crown Copyright 2025
On Saturday, the defence secretary announced a £1.5bn investment to tackle damp, mould and make other improvements to poor quality military housing in a bid to improve recruitment and retention.
Mr Healey pledged to “turn round what has been a national scandal for decades”, with 8,000 military family homes currently unfit for habitation.
He said: “The Strategic Defence Review, in the broad, will recognise that the fact that the world is changing, threats are increasing.
“In this new era of threat, we need a new era for defence and so the Strategic Defence Review will be the vision and direction for the way that we’ve got to strengthen our armed forces to make us more secure at home, stronger abroad, but also learn the lessons from Ukraine as well.
“So an armed forces that can be more capable of innovation more quickly, stronger to deter the threats that we face and always with people at the heart of our forces… which is why the housing commitments that we make through this strategic defence review are so important for the future.”
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