The International Monetary Fund (IMF) delivered a depressing but realistic assessment of the economy when it this week downgraded its growth forecast for the UK from 1.6% to 1.1%, the sharpest revision among our major competitors.

After promising a focus on growth within their election manifesto, the Labour Government now faces a critical test as without decisive action to address these pressures, the UK risks slipping into a period of prolonged stagnation. However, with an increased focus on trade diplomacy, domestic stimulus, and structural reform, not only can these be dealt with effectively, but longer-term resilience can be built into the economy.

Currently, the most immediate concern is the new 10% US tariff rate on UK exports with higher duties applied to strategic sectors such as automotive, steel, and aerospace. For manufacturing clusters already under pressure, this is a serious blow and this is where diplomacy, rather than any direct industrial intervention, is crucial to ensure the UK is not caught in the crossfire of a broader US strategy aimed at rebalancing its own industrial base.

This means that through ongoing talks with the US Government, the Prime Minister and the Chancellor of the Exchequer must push for exemptions or reduced rates, as part of a broader dialogue about cooperation through a much-vaunted trade deal that has seen many iterations over the last few weeks.

But it is not only about the USA and there must be a redoubling of efforts to expand the UK’s export markets........

© BusinessLive