“Iron-clad” and “non-negotiable” is how UK prime minister Keir Starmer recently described the country’s fiscal rules. The government has been coming under pressure to relax the rules and cut itself some financial slack. But according to the PM, these self-imposed restrictions are vital for maintaining UK economic stability.

What Starmer is referring to is notably the “stability” rule, which says that the UK will balance day-to-day public spending with tax receipts, rather than by borrowing, over the course of the parliament.

But the volatility unleashed by US president Donald Trump’s tariff plans has challenged this rule. US tariffs could have a significant economic impact on the UK and the world economies.

Indeed, the International Monetary Fund (IMF) estimates that 10% across-the-board tariffs, if they ultimately result in retaliation from China and the EU, could cut global economic growth by 0.5% in 2026.

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