I’m So Bored With the USA: It isn’t Austerity and This is Not a Love Song 

 

“I’m getting better and better
And I have a new goal
I’m changing my ways where money applies” 

 

The spring statement summed-up everything that Labour no longer represents. There was no mention of the poor or inequality. There was no defence of the welfare state, no transformative ambition, no urgency, despite the climate crisis. 

 

The butchers bill doesn’t make good reading….. Chancellor Ms Reeves has repackaged austerity as “stability”, sacrificing the most vulnerable on the altar of prudence. 

 

• >3m UK families will now lose out from cuts, including to the health element of universal credit; 

• C.370,000 disabled people will lose the personal independence payment (Pip) they currently rely on, made regardless of whether they’re working or not;  

• C.250,000 people risk being pushed into poverty by welfare cuts if they can’t find work.  

• More than 20 people will be poorer for every one person her reforms push into work; 

• The Treasury’s own impact assessment suggest up to 250,000 more people, including 50,000 children, will be living in relative poverty after housing costs by 2030. 

• The Resolution Foundation said C.3m households on incapacity benefits would be affected. About 800,000 claimants will have reduced personal independence payments, saving the government £8.1bn by 2029-30. 

• The Resolution Foundation said lower-income households will be £500 a year poorer by 2030  

 

The Resolution Foundation’s figure contrasts with the chancellor’s claim in her address that people would be “on average over £500 a year better off” under the Labour government. 

James Smith, a research director at the Resolution Foundation, said: “The 2020s are looking like being a disaster for living standards, even compared to the previous decade.” 

Ruth Curtice, the director of the Resolution Foundation thinktank, said while Reeves was right to balance the books, she was “wrong to do so on the backs of low- to middle-income families, on whom two-thirds of the welfare cuts will fall”. 

Paul Kissack, the chief executive of the Joseph Rowntree Foundation, accused the chancellor of “putting the burden of the changing world on the shoulders of those least able to bear the load”. 

“The government needs to protect people from harm with the same zeal as it attempts to build its reputation for fiscal competence,” he added. 

The OBR halved its forecast for growth in gross domestic product in 2025 from 2% to 1%, but upgraded its forecasts for subsequent years. 

 

‘250,000 more people, including 50,000 children, will be living in relative poverty’

 

The UK economy is expected to grow by 1.9% in 2026, 1.8% in 2027, 1.7% in 2028 and 1.8% in 2029, although the watchdog said that tariffs threatened by Donald Trump could wipe out the chancellor’s relatively thin £9.9bn buffer. 

The OBR’s chair, Richard Hughes, warned that if Trump persisted with his plan to impose 20% tariffs between the US and the rest of the world, it could reduce gross domestic product (GDP) by a peak of 1% and wipe out Reeves’s headroom by the end of the parliament. 

He said the hit to global trade from Trump’s tariffs ranked alongside the extra costs from a jump in global interest rates as the major risks to the government’s finances. 

Rumours persist that his price for avoiding tariffs on the UK might be the scrapping of a digital tax currently levied on tech giants. If this does happen it will be interesting to see the reaction of Labour backbenchers as the government will be while letting tech billionaires off the hook to appease the US president, whilst slashing help for vulnerable people,  

The forecaster said the government would have to spend an extra £10.1bn to service its debt by 2029-30, relative to its October forecast, amid rising global borrowing costs. 

Some cheer for the government came with the OBR says the government’s planning reforms will result in housebuilding peaking at its highest level in over 40 years. 

In her Spring Statement, Chancellor Rachel Reeves outlined that the government’s planning reforms will bring the UK closer to the government’s target to build 1.5 million new homes this parliament, with the OBR confirming that the government is on-track to build an extra 1.3m homes. 

The downside to this could be the fact that when property prices grow faster than local wages, inequality shoots up too, straining poorer communities and displacing businesses. Poorer families spend more of their income on housing than rich ones, and the higher that development raises prices, the more extreme the disparity becomes. 

 

‘when property prices grow faster than local wages, inequality shoots up’

 

Then there is the issue that whilst big developments can generate local construction jobs, not all that investment goes into the local economy. Currently, we have a trade deficit of > £14bn on building materials. As a result, a significant proportion of the price of a new tower block benefits the countries we import steel and timber from. Also, the original investors are often based overseas, E.G., the big build-to-rent developers are often owned by foreign private equity firms such as Blackstone. 

 

Despite government denials about more austerity, a new report entitled, “Doom Loop Deepens” from the More in Common thinktank found that: 

 

• 40% think that the UK is already in a recession;  

• 49% worry that the cost of living crisis will never end; 

• 61% are pessimistic about the Spring Statement and only 16% are optimistic. 

• 31% that Britain is returning to austerity;  

• 23% think that austerity never ended. 

 

Given these finding it is no surprise that the government find themselves neck and neck in the polls with the still-hated Tories and a Reform party that barely even existed a year ago but that now has every expectation of cleaning up at the coming local elections. 

A poll by Ipsos Mori shows 62% of voters say Britain is heading in the wrong direction; just 15% think it isn’t. 

Labour campaigned as agents of change, but nothing has materialised. In its place we have fiscal caution which few believe will deliver anything tangible, especially on living costs and public services. As a result, Labour risks losing its voting coalition by chasing supposed credibility over change, managing a crisis it inherited, but refusing to challenge with the tools it controls. 

As we turn our attention to Trumpton we start with a quite borrowed from the Guardian:“Orange Lunatic in the White House. Someone who really didn’t give a shit about the UK. Who only might take notice if American cars were threatened with the same tariff. The UK is now officially a supplicant at the court of King Donald.” 

 

‘49% worry that the cost of living crisis will never end’ 

 

As usual there is much going on in Trumpton, and, as always, it’s all bad. 

VP Vance is paying an unwelcomed visit to Greenland, with the Danish government being quite open about the fact that he isn’t welcome there. 

Earlier this week, US president Donald Trump said: “It’s an island that from a defensive posture, and even offensive posture, is something we need, especially with the world the way it is, and we’re going to have to have it.” 

“So, I think we’ll go as far as we have to go. We need Greenland and the world needs us to have Greenland, including Denmark.” 

Rasmus Jarlov, chair of Denmark’s defence committee, summed up the situation perfectly: “It is also a matter of the entire western alliance. Nobody’s going to be allied to a country that tries to annex parts of that country’s territory.” 

 

‘there is much going on in Trumpton, and, as always, it’s all bad’

 

Turning from America’s colonial ambitions to Russia’s, European leaders have affirmed their support for Ukraine and agreed now was “not the time” to lift sanctions against Russia, but with splits remaining on Franco-British plans for a “reassurance force” to help guarantee an eventual ceasefire. 

France’s president, Emmanuel Macron, said: “Ukraine had the courage to accept an unconditional 30-day ceasefire,” Macron said, and  “Since that Ukrainian announcement, there has been no Russian response. There have just been new conditions posed [by Moscow] for a much more limited and hypothetical ceasefire.” 

PM Starmer told reporters at the British embassy after the summit: “It means increasing the economic pressure on Russia, accelerating new tougher sanctions bearing down on Russia’s energy revenues and working together to make this pressure count.” 

US support for Russia is clear, with Steve Witkoff, their special envoy, saying that four Ukrainian regions wholly or partly occupied by Russia consisted of people who wanted Moscow’s rule in an “overwhelming majority”. 

From colonialism we turn to trade, or rather lack of it, after Trump announce 25% tariffs on all car imports.  

In 2023, the US imported almost $475bn  worth of cars, mostly from Mexico, Japan, South Korea, Canada and Germany. European carmakers alone sold more than 750,000 vehicles to American drivers. 

Almost 50% of the cars sold in the US are imported, and the proposed tariff will add at least $6,000 to the  price of the average car, industry experts say. Domestic auto producers may now increase prices because the tariffs will lower competition from oversea. Should this happen it would sit badly with inflation-weary consumers and voters, especially as candidate Trump had pledged to bring down prices.  

Jonathan Smoke, chief economist at Cox Automotive, a market research firm, said that as a result of Trump’s tariffs could lead to production falling by 20,000 fewer cars per week, a 30% drop. Smoke said, “By mid-April we expect disruption to virtually all North American vehicle production. Bottom line: lower production, tighter supply and higher prices are around the corner.” 

Responding to the proposal, Canada’s OM, Mark Carney, said the era of deep ties with the US “is over”, and that Trump had permanently altered relations and, regardless of any future trade deals, there would be “no turning back. The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over.” 

 

‘The old relationship we had with the United States based on deepening integration of our economies and tight security and military cooperation is over.” 

 

Carney said he would speak to provincial premiers and business leaders  to discuss a coordinated response, with retaliatory measures expected next week, saying: “Our response to these latest tariffs is to fight, is to protect, is to build. We will fight the US tariffs with retaliatory trade actions of our own that will have maximum impact in the United States and minimum impacts here in Canada.” 

South Korea said it would put in place a full emergency response to Trump’s proposed measures by April. 

China’s foreign ministry said the US approach violated World Trade Organization rules and was “not conducive to solving its own problems”. Its spokesperson, Guo Jiakun, said: “No country’s development and prosperity are achieved by imposing tariffs.” 

Japan’s PM, Shigeru Ishiba, said Tokyo was putting “all options on the table”. Japan “makes the largest amount of investment to the US, so we wonder if it makes sense for [Washington] to apply uniform tariffs to all countries.” 

As I wrote in “Who’s Afraid of the Big bad Wolf”, Japan is the largest foreign holder of public U.S. government debt, owning $1.09 tn in debt; not wise to upset them, then!  

 

Domestically, racism is back in vogue; Federal contractors will no longer be explicitly barred from racially segregating their restaurants, waiting rooms and water fountains. A memorandum dated 15 February 2025, issued by the General Services Administration, the procurement arm of the federal government, explicitly dropped those strictures. 

“Any open solicitations that contain any of the provisions or clauses listed above should be amended to remove the provisions and clauses,” the memo read. 

 

 

And so, the madness continues. The losers, as always are those that can’t hit back. As this column has said so many times before, big fucks small! 

 

“Gimme, gimme shelter 

Or I’m gonna fade away” 

 

‘I could have entitled this piece “Victims”, as we seem to be at a point when the weakest in society are easy pickings.

In the UK, it is disabled people and their benefits. There is a case to be made for reforming the benefit system, but there are better ways of doing so.

Everyone needs hope, those at the “bottom” most of all. But, instead of hope we are fed misery; “we can’t afford it”, “there is no money”, etc, etc. What we should be considering is how we help those in need, if this spending more then so be it. The burden should fall on those with the most, not those with the least.     

Instead we are faced with the possibility of US tech billionaires continuing to avoid paying tax as the Digital Services Tax is used as a bargaining tool to offset trade tariffs.

So the billionaires get richer whilst the disabled ………

Should we concede this point it will be the thin end of the wedge. Trump won’t stop there he will come back for more, bullies always do.

Wednesday, or “Liberation Day” as Trump calls it will see all revealed. Trump has already crushed hopes that “reciprocal tariffs” would only target countries that have the largest trade imbalances with the US, telling reporters: “You’d start with all countries. Essentially all of the countries that we’re talking about.”

There can now be little doubt that there will be a global trade war, the only question is, “how bad will it be”?

The UK, as the government loves to tell us, has no money, the finances are already stretched. A global trade war will see the elastic snap, all room for manoeuvre will be gone. There is very little left to cut, so more taxes…rising taxes, no growth, austerity, it’s not looking good for the UK’s two mainstream parties.

What will stop Reform? Mussolini, My mother says the British people won’t follow him, he’s too close to Trump. “British people don’t like his type”!

Lyrically, we start with “This is Not a Love Song” by Public Image Ltd, and we end with “Gimme Shelter” by the Stones……….allrriiiigghhhtttt.

At least I can enjoy America’s decline!

Philip.’

 

@coldwarsteve

 

 

 

Can’t have a column about victims without Victims…

 

 

 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s

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