Economists have warned the UK’s trade deal with he US was unlikely to significantly boost growth directly.
The deal removes tariffs on UK steel and aluminium imports to the US, and cuts the levy on cars from 27.5% to 10%, offering British luxury carmakers like Jaguar Land Rover a reprieve.
But the National Institute of Economic and Social Research (Neisr) said the boost for UK gross domestic product (GDP) will be minimal.
This is because a blanket 10% tariff imposed on imports of most goods by Donald Trump as part of his sweeping “liberation day” announcement remains in place, though talks are ongoing in a UK effort to ease it.
Ben Caswell, Neisr’s senior economist, said: “Whilst the new trade deal with the US constitutes a political win for the Government, the direct impacts on UK GDP are likely to be very small, given we export just £9 billion worth of cars to the US each year and the vast majority of goods won’t benefit from this tariff relief announcement.”
But he added that it would “deliver a welcome boost to business confidence amid the UK’s fragile economic outlook this year”.
Matthew Ryan, head of market strategy at finance firm Ebury, added that while it “unlikely to have any real implications for the UK economy”, and added that the terms of the deal are “not overly favourable” for Britain.
“Let’s not forget that this is also far from a full-blown trade agreement, which will likely take months, if not years, to be finalised, and it will still be some time before the finer details are ironed out.”
But thers said the lack of significant concessions demanded of the UK by Washington was a plus.
The final details of the deal are still to be ironed out with the agreement on steel and automobile tariffs is expected to be concluded imminently, given the urgent need to protect jobs in those sectors.
The UK-US trade deal was urgently needed to protect as many as 150,000 livelihoods, Business Secretary Jonathan Reynolds said.
The minister rubbished suggestions the UK is no better off than before Mr Trump’s tariffs were first introduced.
He said: “If I could rather be in a world where there were no tariffs, of course I would. But that’s just not the world that exists. So it’s not really an option on the table. The option on the table is to have not signed a trade deal with the United States and had higher tariffs, or to have signed a trade deal with the United States and had lower tariffs.
“We’ve signed that trade deal. We’ve got lower tariffs in critical manufacturing sectors in the UK. 150,000 people’s livelihoods that we’ve protected as a consequence of that trade deal.
“That is, by definition, factually better off as a consequence of the action that this Government is taking to stand up for working people across the UK.”
Shadow business secretary Andrew Griffith said the benefits the “quite disappointing” deal offers are “still very unclear” in many areas, after Conservative leader Kemi Badenoch claimed the UK had been “shafted” in the agreement.
Senior Tory Mr Griffith said: “There’s some good elements to Thursday’s deal – I think the car industry and steel industry will welcome at least the reduction. But overall, it’s quite disappointing.
“It’s still very unclear what happens to pharmaceuticals, a really big UK industry, there’s nothing on film and TV, and yet (at) the start of the week, the Government was talking about 100% tariffs on that.”
The director general of UK Steel said the exact details of the UK-US trade agreement for the industry had not yet been revealed.
Gareth Stace said: “The headline here is that we’re really pleased with Government’s negotiations ability to scrap that 25% tariff burden that we have suffered since March. But yes, we don’t know the details.
“We don’t know when this deal comes into force for steel, we don’t know what conditions we need to meet in order to remove the 25% tariff, and we don’t know, crucially also, if all steel producers that export to the US market will be included or excluded.
“There may be issues around ownership, around where the steel is made, and until we see those details, we don’t know whether this heavy burden will be lifted from us.”
The government failed to secure carve-outs for tariffs on pharmaceuticals and the remaining 10% reciprocal tariffs imposed on Britain.
Downing Street has declined to rule out changes to the digital services tax as part of a future agreement with the United States.
The UK-US trade agreement is a “really good deal for Britain”, Treasury minister Darren Jones insisted.
When it was put to him that the deal still left the UK in a worse place than before Donald Trump imposed sweeping tariffs, the Chief Secretary to the Treasury said: “The counterfactual is the world that we live in, not the world that we would like it to be. In relation to the world that we live in, this is a really good deal for Britain.
“We are the first country in the world to be able to negotiate an agreement with the President of the United States to move away from those increased tariffs on global trade.
“And that’s something to be celebrated for the UK economy and for workers that work in those sectors.”