Job losses at Jaguar Land Rover highlight the trade-offs facing Burnham’s economic policy

Sarah Hall considers how global economic shocks can impact regional inequality and argues that any economic devolution agenda must confront the trade-offs that arise as a result, using the example of the Jaguar Land Rover job losses.

Jaguar Land Rover (JLR) has announced that it will cut 4,000 jobs over the next two years. The company currently employs 44,000 people of whom the vast majority – 34,000 – are based in the UK. The job losses will be focused on its Coventry head office.

The announcement comes at an important time for the Burnham government. On the same day as the JLR announcement, Chancellor of the Exchequer John Healey delivered his ‘Growth Speech’ in which he reiterated the government’s commitment to “more investment, more innovation and more jobs”. The JLR announcement clearly shows the difficult trade-offs the government faces as it tries to deliver these ambitions in terms of: profound regional economic inequality in the UK; the UK’s place in a more protectionist international economy; and the relationship between green growth and economic resilience.

JLR’s announcement is a reminder that even low levels of growth are distributed in highly unequal regional ways in the UK. This means that the impacts of declining economic prospects and redundancies in any one sector are not evenly distributed across the UK. In the case of automotive, figures show that the West and East Midlands, (the former housing JLR’s UK activities) account for 48.3% of the UK’s automotive value added. This concentration is delivered partly by large headquarter bases. But these headquarters also act as anchors to significant clusters of small and medium enterprises that have developed specialist niches within complex and dynamic automotive supply chains. This was clearly seen by the impact of the temporary shutdown of JLR activities in late 2025 following a cyberattack. Some of the most significant impacts were felt by smaller firms which were forced to temporarily suspend operations and cancel orders.

At one level, this regional concentration might benefit from the new government’s commitment to greater devolution – which offers the prospect of being able to better tailor pro-growth economic policies to the specific requirements of different parts of the UK, notably in skills. However, the risks need to be acknowledged. Threats to regionally concentrated industries need to be framed as important for UK growth as a whole and not left to newly emerging forms of devolved administration. This is particularly important given the ways in which contractions in one sector impact the social fabric and cultural identity of places, and regions that are dependent on one industry will have less resilience to economic shocks.

Turning to geopolitics, the JLR announcement is one of the clearest examples of the challenges the Prime Minister faces in his ambitions to ‘reindustrialise’ the UK economy at a time when the world economy is becoming more protectionist. The causes for the financial difficulties facing JLR are many and varied, but central among them is its exposure to the new US tariff regimes. JLR is particularly exposed to US industrial policy because the US represents its second biggest export market (after the EU) with one in four of its cars being sold there. New tariffs were announced by the US for car imports in April 2025 as part of a commitment to support the US car industry. The tariff rate for the UK changed over the spring and this uncertainty itself was unhelpful for companies such as JLR in terms of planning. The agreement reached with the UK was that the UK would have a lower rate than other countries of 10% on the first 100,000 UK manufactured cars imported to the US per annum with any imports over this have a 27.5% tariff applied (the rate applied to the majority of US automotive imports).

These tariff changes were cited as leading to a decline of 15% in JLR sales in spring 2025, with the company pausing shipments to the US in April 2025 until the UK’s final tariff rate was confirmed. Beyond the US, there are other threats to reindustrialising the UK’s economy. Support for UK manufacturing through subsidies has not been forthcoming, due, in large part, to fiscal constraints. And the EU’s Made in Europe program, which seeks to protect EU manufacturers from competition, particularly from China, poses threats to British based manufacturers by excluding them from subsidies to EU firms.

Finally, the government faces difficult decisions regarding how to deliver growth in ways that are both environmentally and economically sustainable. In many ways, the automotive sector is at the forefront of these trade-offs. Currently, the UK has a mandate that requires 80% of all new cars sold to be EV’s by 2030. However, the new government has announced that it will hold a consultation to consider whether such a requirement should be watered down. Whilst concerns have been expressed that such changes will make it harder for the UK to meets its electrification and climate goals, car makers and trade unions argue that the current target threatens jobs. Manufacturers such as JLR point to the fact that there is not the demand for such a number of EVs in the UK, partly due to the higher electricity prices the UK has compared to most other advanced economies. Moreover, its sales to rapidly growing international markets such as China have declined as China has invested heavily in the production of its own more affordable domestic vehicles. Indeed, Chinese manufacturers, such as BYD, have been growing their market share rapidly in the UK with Chery’s Jaecoo being the third best-selling car in the UK in 2026, leading to it being dubbed the Temu Range Rover.

Taken together, JLR’s redundancy announcement is a stark reminder that attempts to devolve and reindustrialise the UK economy to deliver much needed growth need to acknowledge the challenges and difficult choices involved in relation to protectionist tariff wars and green growth. But perhaps most importantly these policy dilemmas play out on an already highly uneven regional industrial landscape that makes the trade-offs even starker in certain parts of the UK.

By Professor Sarah Hall, Professor of Geography at the University of Cambridge.