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The dangerous relationship

Keir Starmer’s hunger for quick wins with the US is storing up long-term defeats.

By Freddie Hayward

Peter Mandelson’s brief grimace was the only sign the government knew the ploy was a stretch. He was peering over Donald Trump’s left shoulder in the Oval Office as Keir Starmer’s voice burbled through the loudspeaker on the Resolute Desk. The Prime Minister was extolling the UK-US trade deal as a monument to the Allied victory in 1945. It was the start of an unconvincing sales pitch to those listening back home.

The reality lay to Trump’s right. There, a large chart with big green and red arrows showed that tariffs on the UK had risen by 6.6 points, while British tariffs on the US were down 3.3 points.

The Prime Minister was parading the special relationship while Trump was bragging about an American tour de force. What was going on? The president’s woes at home are key here: his poll numbers have cratered and a recession looms. So what’s more likely: that the nationalist president wanted to cut a deal in solidarity over 1945 or that he pressured No 10 in order to calm Wall Street and coax other countries to the negotiating table?

Speed did matter for British jobs in the steel and car industries. Tariffs on cars and steel and aluminium were indeed cut, while the 10 per cent baseline remains in place. But trumpeting Britain’s place atop the queue makes it seem the priority is upholding the perception of a special relationship. Ignore the grumbles that such analysis is cynical: delusions of grandeur make for poor policy.

We saw something similar when Starmer returned from the White House in February. He was garlanded like a British Talleyrand, but his main ask – for a security guarantee in Ukraine – was ignored. Ditto the promise that the UK would avoid tariffs: on Liberation Day, Britain got the same treatment as Morocco.

And what is to come might be even harder to stomach. As I reported yesterday, and as today’s Telegraph frontpage confirms, the Americans are demanding the government rely less on China.

Then there is chatter about a technology deal. As Andrew has noted, Starmer headed straight to Palantir’s offices after the White House in February with Mandelson, who was a cheerleader for the company before he returned to politics. The government seems to think Britain’s economic salvation lies in opening the door to Silicon Valley.

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Anti-trust lawyers at the Department of Justice – the foot soldiers in the battle against tech companies’ feudalistic power – have told me that the British Competition and Markets Authority’s policy papers were once read with admiration. The CMA had pushed-back against Microsoft’s acquisition of Activision Blizzard, the gaming company, and forced Meta to divest Giphy.

Now, they lament that Rachel Reeves has made an Amazon executive the interim chair of the agency supposed to restrain corporate power. This week’s news that the American company DoorDash is plans to buy Deliveroo is the latest sign that British businesses over a certain size seem destined to be swallowed by American firms.

Remember the American author Denny Ludwell’s line from 1930: “We were Britain’s colony once, she will be our colony before she’s done. Not in name, but in fact. But we shan’t make Britain’s mistake: too wise to govern the world, we shall merely own it.”

The government is, therefore, gripped by short-termism. Dodging black holes five years from now incentivises hawking British assets. A hunger for quick wins can lead to dangerous bargains, with little room left for figuring out what type of economy they want to build. Everything is mitigation, in other words, and the trade deal with the US is only the latest example.

This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here

[See also: Farage rising]

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