Gordon Brown has called for an “economic coalition of the willing” to respond to Donald Trump’s tariffs with coordinated economic policies, including a reduction of interest rates.
The former prime minister also said it was a moment for the UK to go even further in renewing ties with the EU, suggesting it should mean “collaboration that is even more extensive than removing post-Brexit trade barriers”.
His call comes as China announced new tariffs of 84% on imports of all US goods, in a move that sent stock markets falling further. Keir Starmer struck a downbeat tone on Wednesday at the prospect of reducing all new tariff barriers with the US.
Brown, who remains close to the prime minister, said world leaders needed to step up their collective action, warning: “We are seeing a simultaneous breakdown in economic and geopolitical orders.”
Writing in the Guardian, he said the world had to draw from experiences of the 2008 financial crash, including offering extended credit to firms, lowering interest rates and mobilising the World Bank and International Monetary Fund to protect poorer nations where their industries could be decimated by tariffs.
Brown wrote: “We need an economic coalition of the willing: like-minded global leaders who believe that, in an interdependent world, we have to coordinate economic policies across continents if we are to safeguard jobs and living standards.”
Referencing lessons learned during the financial crash, he added: “Global problems require globally coordinated solutions. We need a bold, international response that measures up to the scale of the emergency.”
In one of the sharpest criticisms of Trump by the former British leader, Brown said the “world is being brought to its knees by one economy, outside which live 96% of the population, who produce 84% of the world’s manufactured goods”.
He said leaders should consider offering extended credit to exporting and importing firms, which “was central to the global response as trade collapsed in 2009”.
But he also warned that one of the most urgent threats was a collapse in consumer confidence and declining business investment. “That means we may need a synchronised reduction in interest rates – an initiative the US might well join – backed by fiscal activism in the countries where there is space to expand.”
Brown said world leaders must also be wary of China’s position, saying Beijing should be reminded that it was “in its interests to focus more on expanding domestic consumption than flooding the world’s markets with cut-price goods it cannot now sell in the US”.
The former chancellor said that a chance to “build back better” in the UK would mean “working ever more closely with the EU”. Among those steps should be a “Europe-wide, off-balance-sheet, special-purpose defence and security fund”, Brown said.
He warned that the world’s economy was at a moment of great peril. “It is not only the multilateral economic system that is under assault, but every single pillar of the rules-based order, from respect for the law to the self-determination of nations and historic commitments to humanitarian aid,” Brown said.
“International cooperation is in our collective interests, and a zero-sum world of competing nationalisms leaves us all poorer and less secure.”
Rachel Reeves hinted in an interview with the Financial Times on Wednesday that the government would step up its work to improve ties with Europe. The chancellor said: “Many of the developments, whether it is Russia’s invasion of Ukraine or the challenges in global trade at the moment, mean that there’s an even greater imperative to improve our trading relationships with Europe.”
Starmer told ITV that the UK was still “negotiating and we hope to improve the situation, but what I mean by this is that simply thinking that any change in the rates or any deals is going to be enough, to my mind is wrong”. But the prime minister also underlined that the government was “talking to other countries about lowering trade barriers”.
