Tariff-hit corporations could possibly be thrown a £10bn lifeline: Covid-style assist might save 100,000 jobs
Ministers could launch a Covid-style support package worth up to £10billion for tariff-hit businesses to save up to 100,000 jobs, a leading City economist has claimed.
The prediction from Deutsche Bank’s Sanjay Raja came amid growing warnings of the impact of Donald Trump’s trade war on UK firms – just as they are already being clobbered by Labour’s £25billion National Insurance raid.
Prime Minister Keir Starmer has lined up a series of measures to shield key industries such as the car sector hardest hit by the US President’s tariffs.
And he has said he is ‘ready to use industrial policy to help shelter British businesses from the storm’.
It follows Trump’s decision to impose across-the-board tariffs of 10 per cent on imports from the UK.
And Britain’s car industry and steel makers will be snared by America’s 25 per cent global tariffs on those sectors.
Support: Prime Minister Keir Starmer has lined up a series of measures to shield key industries such as the car sector hardest hit by the US President’s tariffs
Raja said government help could include grants and loans to industries including chemicals and companies exporting heavy machinery and equipment.
Grants and loans are likely to be administered by the National Wealth Fund, the British Business Bank and ‘potentially’ the Bank of England, costing between £5billion-£10billion, he added.
This scale of state support would fall well short of the £170billion injected to keep firms afloat during the pandemic five years ago.
But Trump’s trade shock could cost up to 100,000 jobs unless the state steps in, Raja said.
A leading recruiter said the timing of Labour’s tax hikes on businesses ‘couldn’t be more terrible’.
James Reed, head of jobs site Reed.co.uk, said the rise in National Insurance Contributions (NICs) for employers, which came into force on Sunday, was ‘piling costs’ on firms which were already ‘struggling’. Chancellor Rachel Reeves unveiled plans for the NICs hike in her October Budget.
But Reed said it was ‘getting harder for people to get jobs’ and that the rise in NICs would only exacerbate the problem.
He highlighted a survey conducted by his firm of more than 250 employers which reported nearly half were ‘scaling back’ hiring plans.
Trump’s blanket tariffs have sparked a multi-day stock market plunge amid fears a re-ordering of world trade will herald a global recession.
That could mean the UK suffers ‘even lower growth and higher inflation’, said Mohamed El-Erian, a leading economist and former head of investment manager Pimco.
As a result, British firms now faced ‘three choices – lower profits, cutting costs and employment, or increasing their prices,’ he told the BBC.
Former NatWest bank chairman Sir Howard Davies said the stock market ‘crash’ caused by Trump’s tariffs had ‘come out of a blue sky as a result of what most people would regard as a major policy mistake’ by the US President.
