Sir Keir Starmer has said US-UK trade talks are “well advanced” ahead of tariffs expected to be imposed by Donald Trump on the UK this week – but rejected a “knee-jerk” response.
Speaking to Sky News political editor Beth Rigby, the prime minister said the UK is “working hard on an economic deal” with the US and said “rapid progress” has been made on it ahead of tariffs expected to be imposed on Wednesday.
But, he admitted: “Look, the likelihood is there will be tariffs. Nobody welcomes that, nobody wants a trade war.
“But I have to act in the national interest and that means all options have to remain on the table.”
Sir Keir added: “We are discussing economic deals. We’re well advanced.
“These would normally take months or years, and in a matter of weeks, we’ve got well advanced in those discussions, so I think that a calm approach, a collected approach, not a knee-jerk approach, is what’s needed in the best interests of our country.”
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Downing Street said on Monday the UK is expecting to be hit by new US tariffs on Wednesday – branded “liberation day” by the US president – as a deal to exempt British goods would not be reached in time.
A 25% levy on car and car parts had already been announced but the new tariffs are expected to cover all exports to the US.
Jonathan Reynolds, the business and trade secretary, earlier told Sky News he is “hopeful” the tariffs can be reversed soon.
But he warned: “The longer we don’t have a potential resolution, the more we will have to consider our own position in relation to [tariffs], precluding retaliatory tariffs.”
He added the government was taking a “calm-headed” approach in the hope a deal can be agreed but said it is only “reasonable” retaliatory tariffs are an option, echoing Sir Keir’s sentiments over the weekend.
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‘Everything on table over US tariffs’
Mr Trump will unveil his tariff plan on Wednesday afternoon at the first Rose Garden news conference of his second term, the White House press secretary said.
“Wednesday, it will be Liberation Day in America, as President Trump has so proudly dubbed it,” Karoline Leavitt said.
“The president will be announcing a tariff plan that will roll back the unfair trade practices that have been ripping off our country for decades. He’s doing this in the best interest of the American worker.”
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Trump’s tariffs: What can we expect?
Tariffs would cut UK economy by 1%
UK government forecaster the Office for Budget Responsibility (OBR) said a 20 percentage point increase in tariffs on UK goods and services would cut the size of the British economy by 1% and force tax rises this autumn.
Global markets remained flat or down on Monday in anticipation of the tariffs, with the FTSE 100 stock exchange trading about 1.3% lower on Monday, closing with a 0.9% loss.
On Wall Street, the S&P 500 rose 0.6% after a volatile day which saw it down as much as 1.7% in the morning.
However, the FTSE 100 is expected to open about 0.4% higher on Tuesday, while Asian markets also steadied, with Tokyo’s Nikkei 225 broadly unchanged after a 4% slump yesterday.
One year on, how’s Keir Starmer’s government going? We’ve put together an end-of-term report with the help of pollster YouGov.
First, here are the government’s approval ratings – drifting downwards.
It didn’t start particularly high. There has never been a honeymoon.
But here is the big change. Last year’s Labour voters now disapprove of their own government. That wasn’t true at the start – but is now.
And remember, it’s easier to keep your existing voter coalition together than to get new ones from elsewhere.
So we have looked at where voters who backed Labour last year have gone now.
YouGov’s last mega poll shows half of Labour voters last year – 51% – say they would vote for them again if an election was held tomorrow.
Around one in five (19%) say they don’t know who they’d vote for – or wouldn’t vote.
But Labour are also leaking votes to the Lib Dems, Greens and Reform.
These are the main reasons why.
A sense that Labour haven’t delivered on their promises is top – just above the cost of living. Some 22% say they’ve been too right-wing, with a similar number saying Labour have “made no difference”. Immigration and public services are also up there.
Now, YouGov asked people whether they think the cabinet is doing a good or a bad job, and combined the two figures together to get a net score.
Here’s one scenario – 2024 Labour voters say they would much prefer a Labour-led government over a Conservative one.
But what about a Reform UK-led government? Well, Labour polls even better against them – just 11% of people who voted Labour in 2024 want to see them enter Number 10.
Signs of hope for Keir Starmer. But as Labour MPs head off for their summer holidays, few of their voters would give this government an A*.
Sir Keir Starmer’s plan to recognise Palestine as a state has been attacked as “appeasement towards jihadist terrorists” by Israeli Prime Minister Benjamin Netanyahu.
The prime minister said the UK will recognise a Palestinian state by September unless Israel takes “substantive steps” to end the situation in Gaza, Israel agrees to a ceasefire, commits to a long-term sustainable peace, allows the UN to restart aid supplies and does not annexe the West Bank.
About 250 MPs from all parties – half of them Labour – had signed a letter last week calling for Sir Keir to immediately recognise a Palestinian state.
Sir Keir said that by giving Israel a deadline of 9 September UN meeting, he hoped this would play a part “in changing the conditions on the ground, and making sure aid gets into making sure that there is hope of a two-state solution for the future”.
But Mr Netanyahu condemned the plan, saying Sir Keir “rewards Hamas’s monstrous terrorism and punishes its victims”.
“A jihadist state on Israel’s border today will threaten Britain tomorrow,” he wrote on X.
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“Appeasement towards jihadist terrorists always fails. It will fail you too. It will not happen.”
The Israelis also accused Sir Keir of pandering to his MPs and France, after Emmanuel Macron committed to recognising a Palestinian state last week, and harming efforts to release Israeli hostages.
Image: Benjamin Netanyahu was effusive in his condemnation
Lib Dems and Greens: ‘Bargaining chip’
Sir Keir also faced accusations of using Palestinian state recognition as a “bargaining chip” by both the Lib Dems and the Green Party.
Lib Dem leader Sir Ed Davey said a Palestinian state should have been recognised “months ago” and “far greater action” is needed to stop the humanitarian disaster in Gaza.
Image: Jordanian military personnel prepare planes to deliver airdrops in Gaza on Monday
Green Party foreign affairs spokesperson Ellie Chowns, who wants immediate state recognition, said it was a “cynical political gesture”.
Humza Yousaf, Scotland’s former SNP first minister, who revealed a family member was killed in Gaza days ago, told Sky News statehood “shouldn’t be dependent” upon the conditions Sir Keir has set for Israel, but is the “inalienable right” of the Palestinian people.
The British Palestinian Committee, representing Palestinian interests in the UK, described conditions as “absurd and performative”.
Image: Palestinians wait to receive food from a charity kitchen, amid a hunger crisis in Gaza City. Pic: Reuters
UK Jewish groups seek clarity
The Board of Deputies of British Jews, the UK’s largest Jewish organisation, said it was “seeking urgent clarification” that the UK will not recognise Palestine as a state if Israeli hostages remain in Hamas captivity, or if Hamas keeps rejecting a ceasefire deal.
The Labour Friends of Israel group said it has “shared goals” with the government but state recognition “will be a merely symbolic act unless the UK uses its influence to establish the principles of a meaningful pathway to a Palestinian state”.
Sarah Champion, Labour MP and chair of the international development committee, who started the MP letter calling for state recognition, said she was “delighted and relieved”.
However, she added: “I’m troubled our recognition appears conditional on Israel’s actions.”
When Foreign Secretary David Lammy announced the plan at a UN meeting, he received applause.
Not many other Labour MPs commented.
Tories accuse Starmer of appeasing MPs
Conservative leader Kemi Badenoch accused Sir Keir of being more focused on a “political problem for the Labour Party” than other issues facing the UK.
“Recognising a Palestinian state won’t bring the hostages home, won’t end the war and won’t get aid into Gaza,” she posted on X.
“This is political posturing at its very worst.”
Tory shadow foreign secretary Priti Patel said the announcement was “to appease his backbenchers” as “he knows that promises to recognise Palestine will not secure lasting peace”.
Image: Aid trucks were allowed into Gaza on Tuesday. Pic: Reuters
Trump did not discuss statehood with Starmer
Donald Trump said he and Sir Keir “never did discuss” the PM’s plan to recognise a Palestinian state during their meetings in Scotland the day before.
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Trump responds to Sky question on Israel
However, Tammy Bruce, spokeswoman for the US state department, said Sir Keir’s plan is a “slap in the face for the victims of October 7”, which “rewards Hamas”, the Telegraph reported.
Gary Neville has criticised the government’s national insurance (NI) rise this year, saying it could deter companies from employing people and “probably could have been held back”.
The former Manchester United and England footballer-turned business owner, who vocally supported Labour at the last election, employs hundreds of people.
But he expressed his frustration at the recent hike on employers’ NI, which has significantly increased the taxes businesses have to pay for their employees.
Speaking to Sky News’ Business Live, Neville said: “I honestly don’t believe that, to be fair, companies and small businesses should be deterred from employing people. So, I think the national insurance rise was one that I feel probably could have been held back, particularly in terms of the way in which the economy was.”
While the Sky Sports pundit thought the minimum wage increase introduced at the same time was necessary to ensure that people are paid a fair wage and looked after, he made it clear the double whammy for businesses at the start of April would be a challenge for many companies big and small.
“I mean look it’s been a tough economy now for a good few years and I did think that once there was a change of government, and once there was some stability, that we would get something settling,” he said. “But it’s not settling locally in our country, but it is not settling actually, to be fair, in many places in the world either.
“I don’t think we can ever criticise the government for increasing the minimum wage. I honestly believe that people, to be fair, should be paid more so I don’t think that’s something that you can be critical of. I do think that the national insurance rise, though, was a challenge.”
Neville’s business interests are diverse, spanning property development, hospitality, media, and sports.
He co-founded GG Hospitality, which owns Hotel Football and the Stock Exchange Hotel, and is involved in Relentless Developments, focusing on building projects in the North West. He is also a co-founder of Buzz 16, a production company, and a partner in The Consello Group, a financial services company.
The tax increase is expected to raise £25bn for the Treasury, with employers having to pay NI at 15% on salaries above £5,000, and up to 13.8% on salaries above £9,100.
The rise has already led the Bank of England to warn that it is contributing to a job market slowdown.
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NI and tariffs pile pressure on firms
Governor Andrew Bailey warned last month that “the labour market has been very tight in the past few years, but we are now seeing signs that conditions are easing, employment growth is subdued, and several indicators of labour demand and hiring intentions have softened”.
The government has defended the tax increase, announced by Rachel Reeves in last year’s budget and implemented in April, arguing that the money was needed to pay for public services like the NHS to help bring down waiting lists.
‘Can’t get any worse’ for Man Utd
Neville conceded that turning beleaguered football club Manchester United around could prove more difficult than trying to bring about substantial economic growth.
The side finished 15th last season – its worst performance in the history of the Premier League.
“Yeah, that could be a bigger challenge than the economy… I think the two signings are good signings yet, there’s a couple more needed,” Neville said of his former club’s fortunes.
“I think they need a goalkeeper. And I think if they fill those two positions with decent signings, then United can have a lot, I mean, they have to have a better season than last year. It can’t get any worse, really.”