DEFENDING Treasury rules is Labour’s priority amid the global economic turmoil, Chancellor Rachel Reeves confirmed today.

She warned MPs that the fiscal rules limiting government debt and spending remained “sacrosanct” even as more Labour voices are raised to demand their relaxation.

And Prime Minister Keir Starmer told a committee of MPs that his instinct was not to “jump in with both feet to retaliate” to US President Donald Trump’s tariffs.

Waving the shroud of Liz Truss to terrify MPs into supporting this strategy of masterly inaction on all fronts, Ms Reeves said: “We saw what happened when the previous government lost control of the public finances.

“It resulted in interest rates going through the roof.

“We won’t make those mistakes. That’s why the fiscal rules are non-negotiable and stability for this government is sacrosanct.”

It is much less clear what action the government is actually proposing to counter the impact of Trump’s tariffs on British industry beyond the limited aid for the car sector announced on Monday.

The Cabinet appears to be hoping that a deal can be cut with the volatile US president to exempt Britain from the extra taxes on imported cars and steel, over and above the general 10 per cent to be charged on all goods.

A Downing Street spokesman said that Sir Keir told the Cabinet that “businesses have been clear they want a calm and pragmatic response from the government, continued dialogue with the US on an economic deal, while making preparations for all of the options available in response.”

He also opined to ministers that “this new era for the global economy was not a passing phase, and was why we must act to accelerate our industrial policy to strengthen the UK as a place to invest.”

That industrial policy amounts to very little at present, with Ms Reeves identifying only life sciences alongside cars and steel as industries where there may be intervention.

The full policy is not being unveiled until June and, since the government complains daily of having no money, expectations for it must be very modest.

The Labour chair of the influential Commons treasury committee, Meg Hillier, joined those pressing Ms Reeves to relax her fiscal straitjacket.

”The world has been rocked by the announcements by President Trump on tariffs last week,” she told the Commons. 

“It’s an event that is as significant as the financial crisis of 2008 or indeed perhaps as Covid.

“In those instances the state unleashed everything it could to try and resolve those issues.

“Is the Chancellor considering changing any of her rules in order to make sure that everything that the state can throw at this problem is being done?”

Nothing doing was Ms Reeves’s reply.  She likewise ruled out launching a “buy British” campaign proposed by the Liberal Democrats on the grounds that “if every country in the world decided that they only wanted to buy things produced in their country, that is not a good way forward.”

Liberal Democrat deputy leader Daisy Cooper responded that this was “an insult to businesses being pushed to the brink by Donald Trump’s trade war” and “completely out of touch with the British people who are rallying behind local businesses in their time of need.”

And maintaining her do-little approach, the Chancellor said she would not act against the threat of “dumping” by countries no longer able to sell into the US market because the “first priority is not to create more trade barriers, but to reduce the ones that exist today.”

However, Business Minister Sarah Jones did pledge “money ready to go to back up British industry” after a meeting with steel industry bosses and unions, but Sir Keir himself refused to offer specifics when questioned by MPs later.

Ms Reeves insisted that all was well because Bank of England governor Andrew Bailey had told her that “markets are functioning effectively and that our banking system is resilient.” 

That by no means calmed all Labour MPs who, battered by the huge cuts to disability benefits and to overseas aid to fund arms spending, are in a mood of sullen despair at Sir Keir’s reluctance to stand up to Mr Trump or take action.