Sir Keir Starmer has opened the door to further savage spending cuts as he desperately tries to ward off recession following the economic meltdown triggered by Donald Trump’s tariffs. The Prime Minister insisted the Government would stick to his economic masterplan as he called for “cool” heads to see Britain through the global crisis.

Sir Keir promised not to increase the three main revenue-raisers of income tax, National Insurance and VAT – insisting: “The first lever can’t be more taxes.” But with the UK economy already flatling, this could mean more brutal cuts to services as well as an increase in borrowing. His remarks came as stock market volatility raged around the world on Monday.

The value of US stocks dropped sharply as markets opened on Monday afternoon, following falls in London and across Europe and Asia earlier.

Markets on Wall Street fell steeply as they opened before rallying, while in London the FTSE 100 hit its lowest level for a year.

The US president’s tariffs blitz threatens to severely damage Britain’s growth outlook.

Economists have warned this could force Sir Keir to raise taxes, make deeper spending cuts or break his “fiscal rules” to increase borrowing.

Asked if he would stick with his pledge not to hike the three main taxes, the PM said: “We made that commitment in the manifesto and we were absolutely clear about going into the Budget and the spring statement, and that is a commitment we’ve made, and a commitment that we will keep, because the first lever can’t be more taxes.

“My strong belief is that we have to drive our economy, create the conditions for investment, which we have done – there’s been record investment coming into our economy.”

Speaking at a Jaguar Land Rover plant in the West Midlands, Sir Keir added: “I’m still strongly of the view that the challenge we face is how to grow our economy, not just the sort tax-and-spend levers."

Labour’s election vow that surging GDP would fund its spending plans has already evaporated thanks to a sluggish growth forecast.

Chancellor Rachel Reeves jacked up taxes by £40billion at the last Budget, including £20billion of National Insurance hikes on employers that kicked in this week.

And Whitehall is bracing for spending cuts further to last month’s benefit squeeze.

Ms Reeves has previously said her fiscal rules not to borrow to fund day-to-day spending are “non-negotiable".

But quizzed on Monday if they would be in place for the next five years, Sir Keir did not categorically commit to keeping them.

Ms Reeves already bent her fiscal rules last year allowing her to borrow more to fund spending plans.

Despite the continuing market turmoil, Mr Trump showed no sign of changing course on Monday, urging people to “be strong, courageous and patient”, promising that “greatness will be the result”.

The president has imposed a 10% tariff on US imports of British goods, a 25% tariff on cars and separate import taxes on steel and aluminium.

The Prime Minister announced extra flexibility in the zero-emission vehicle mandate as the automotive industry phases out petrol and diesel cars and vans.

Sales of hybrid cars that cannot be plugged in to charge will be allowed to continue until 2035, although the Government confirmed the sale of new purely petrol or diesel-powered cars will be banned from 2030.

Asked whether other green initiatives could be eased to protect businesses, Sir Keir said “there’s a global race on for the jobs of the future in relation to net zero” and “I don’t think now is the time to step away from that race”.

But he said: “We’re not ideological, we’re pragmatic. If there’s flexibilities that help, which is what we’ve done today in important times for JLR, of course we will take those steps.”

Reform UK leader Nigel Farage, who has long supported Mr Trump, said he thought the tariffs were “a bit excessive”.

“He promised he’d do it in the run-up to the American election,” Mr Farage said.

“So you can’t say he’s breaking his promises, but I think the impact of it – my own view is the impact of it has been bigger than he could have predicted.”

He said he speaks to Mr Trump “far less” now than he did during his first term as US president.

Downing Street is still holding out hope for an economic deal with the US that will do away with tariffs.

The PM’s spokesman said negotiations were at an “advanced stage”.

But he has also launched a four-week consultation for business for imposing retaliatory measures on US goods heading here.

The PM held telephone calls on Sunday with European Commission President Ursula von der Leyen, German Chancellor Olaf Scholz and leader of the German Christian Democratic Union party Friedrich Merz.