France’s finance minister Eric Lombard has opened the door to letting the French government’s deficit reduction target slip this year – ruling out extra spending cuts and tax increases to offset a potential shortfall in growth.

Speaking to BFM TV, Mr Lombard said things were uncertain and it was necessary to wait to see in the coming weeks how negotiations with the United States would go over recently announced tariffs to have a better idea of their impact on the French economy.

If tariffs on the European Union – amounting to 20 per cent on EU imports, with higher levels on certain French territories – were maintained, Mr Lombard said, “revenue would decrease, the GDP would decrease, which would – without getting too technical – degrade the level of the deficit, and I think in that case, to protect the French people, I think we must accept that.”

France has been aiming to trim its deficit to 5.4 per cent of economic output this year from 5.8 per cent last year as a step toward bringing its shortfall in line with a European Union ceiling of 3 per cent by 2029.

But Paris still has one of the biggest fiscal gaps in the EU and, unlike other big European countries, it will not be able to bring its debt burden to pre-pandemic levels by the end of the decade.

Banking stocks are among the heavier fallers on the FTSE 100 this morning as the UK index slumped to its lowest level since 15 January, with Asia-focused firm Standard Chartered dropping by around 4 per cent.

Mining and commodity stocks were also among the fallers, after specific tariffs on metal production, such as aluminium.

It came after further declines in the Asian markets, after heavy losses across global stock markets on Thursday.

The Hang Seng Index in Hong Kong was down 1.5 per cent and Japan’s Nikkei dropped 2.4 per cent, adding to losses in the previous session, as traders continued to digest the impact of Donald Trump’s tariff plans.

In the US on Thursday, the Dow Jones and S&P indexes both suffered their worst days since 2020.

The FTSE is now down 1.16 per cent in early morning trading, with Germany’s DAX index also tumbling 1.12 per cent and the Euronext 100 down 1.49 per cent this morning.

The below graph, from the London Stock Exchange, shows the FTSE’s downwards trajectory in recent days:

A Treasury minister said the UK government is “negotiating intensively” and “at pace” to secure an economic deal with the US.

Asked why the government was consulting on possible retaliatory action given most economists say it would lead to a bigger hit to the economy, exchequer secretary to the Treasury James Murray told Sky News: “We’ve been negotiating intensively to secure a deal since the prime minister went to Washington earlier this year and we’re continuing those negotiations at pace to secure a deal now.

“Obviously we’re engaging with businesses, we have been throughout this process.

“The next stage of engagement is to ask their input about what possible measures would look like in terms of the UK response, because we want to involve businesses in that decision, and we need to be clear that we keep all options on the table … we reserve the right to retaliate, but we want a deal, and our full focus is on that.”

Another day in the stock markets, another series of losses looking likely.

The FTSE 100 has opened 0.64 per cent down; nothing approaching the scale of yesterday’s destruction of value in the US markets of course, but still giving up hard-won ground from earlier in the year as a result of Trump’s tariffs.

After Asian markets suffered a similar continued downward spiral overnight, the same is now showing true in Europe: the CAC 40 in France, the DAX in Germany and the Euronext 100 are all down between two-thirds and a full per cent this morning.

“Liberation day has left markets in a state of shock. The situation is fluid, but we believe tariffs aren’t going away anytime soon. While the US has a lot to lose, EU equities are holding up relatively well, even more so in dollar terms,” wrote analysts at Barclays this morning.

Foreign secretary David Lammy has said he regrets the return to protectionism in the United States.

Speaking as he arrived in Brussels to meet his Nato counterparts, Mr Lammy told reporters: “The United Kingdom, like France, is a great maritime nation.

“We are a nation that believes in open trade, and I regret the return to protectionism in the United States, something that we’ve not seen for nearly a century. As you know, we are consulting with business and industry. At this time, we are engaged in discussions with the United States to strike an economic agreement and an economic deal.

“And of course, we have been absolutely clear that all options are on the table as we ensure the national interests of the British people, who will be very concerned at this time about how this affects the bottom line for them and their economic welfare.”

Tory former chancellor Jeremy Hunt has revived the Brexiteer call to turn Britain into “Singapore-on-Thames” by making the UK a low-tax nation welcoming free trade in response to Donald Trump’s tariffs.

Writing in The Telegraph, Mr Hunt urged Sir Keir to “resist the siren song of protectionism”, saying: “Countries like Singapore demonstrate, openness can still deliver excellent results. Over the last half century, its living standards have grown five times faster than ours.

“Those who deride the idea of “Singapore-on-Thames” fail to understand that the heart of their success has not been a harder-edged social policy but the building up of internationally competitive businesses through willingness to trade.

“But Singapore didn’t invent free trade. That honour belongs to Britain. Even if others turn their backs on it, we should remember the benefits of one of our greatest gifts to the world.”

The UK is braced for more market chaos on Friday as the government considers its response to Donald Trump’s tariffs.

The FTSE 100 fell to a three-month low yesterday after the news that British exports to the US would face a blanket 10 per cent tariff.

An “indicative list” published by the British government named some American products that could be targeted in its response, including bourbon whiskey, motorcycles, guitars and jeans.

But an immediate response is unlikely as trade secretary Jonathan Reynolds told MPs he would hold a four-week consultation on retaliatory action.

The government still hopes for an “economic deal” with the US to secure some exemption from the tariffs, with prime minister Sir Keir Starmer promising businesses that he would “fight for the best deal for Britain”.

Donald Trump has claimed that Sir Keir Starmer “was very happy” with Washington’s new 10 per cent tariffs on UK goods.

“We have a very good dialogue. I think he was very happy about how we treated them with tariffs,” the US president told reporters on Air Force One.

Mr Trump added that he was open to negotiations on the tariffs if countries offered “something that is so phenomenal”.

Speaking at the launch of his local government campaign in Chesterfield on Thursday, Sir Keir said that the world was at the beginning of a “new economic era” in which “we have to act and lead differently” – describing the response to Mr Trump’s tariffs as “not just a short-term tactical exercise”.

The prime minister said: “It is the beginning of a new era, we need to understand that, just as we have for defence and security, we have to understand the changing world when it comes to trade and the economy.”

Turkey wants to negotiate with the US to lift the 10 per cent additional tariffs announced by president Donald Trump, trade minister Omer Bolat said this morning.

“We want to discuss the issue in negotiations with the US Department of Commerce and Trade Representative… since there is a $2.4bn surplus in favour of the US in trade between the two countries for 2024,” he said in a statement.