Labour has abandoned plans for a £3 billion tax raid on tech companies such as Amazon and Facebook after being warned that the policy could result in a trade war with the United States.
Under proposals previously outlined by Rachel Reeves, the shadow chancellor, the party had pledged to impose a 10 per cent digital services tax on the revenues of predominantly American search engines, social media companies and online marketplaces.
The money raised was earmarked to fund a £3 billion support package to reduce business rates for thousands of small high street shops and businesses.
The idea has been ditched after warnings that it might provoke retaliatory trade sanctions from the Biden administration. It is the second recent change in Labour’s economic policy as
