Donald Trump threatens to downgrade Britain's trade deal in latest attack on Keir Starmer

Mr Trump also criticised the UK's refusal to help reopen the Strait of Hormuz, a crucial shipping route that handles approximately one-fifth of global oil and gas supplies.

"We gave them a good trade deal. Better than I had to. Which can always be changed," the US President told Sky News.

The remarks signal a dramatic deterioration in relations between Washington and London, with Mr Trump describing the state of the special relationship as having "been better" and "sad".

US Treasury Secretary Scott Bessent dismissed warnings from the International Monetary Fund that the Middle East turmoil could trigger a worldwide recession, with Britain forecast to suffer the most severe impact among major economies.

Speaking to the BBC before scheduled talks with Chancellor Rachel Reeves in Washington, Mr Bessent argued that enduring "a small bit of economic pain" was justified for long term global security.

In a striking comparison, he questioned what damage a nuclear weapon striking the capital would inflict on the world economy.

"I wonder what the hit to global GDP would be if a nuclear weapon hit London... I am saying that I am less concerned about short-term forecasts, for long-term security," Mr Bessent stated.

British consumers are already experiencing rising costs at petrol stations, with energy and food prices expected to climb further.

The Economic Prosperity Deal between Sir Keir and Mr Trump was announced in May last year, covering multiple sectors including automotive, aviation and agricultural industries.

However, several components of the arrangement remain incomplete, with full negotiations and implementation still outstanding.

A technology partnership between the two nations has already reportedly been put on hold.

Mr Trump's warning that the trade terms "can always be changed" represents a clear threat to an agreement the Prime Minister had hoped would strengthen transatlantic economic ties.

The President's willingness to revisit the deal reflects his frustration at Britain's stance on the Iran conflict, particularly after Sir Keir blocked American forces from using UK bases for offensive operations.

Mr Trump renewed his attacks on Labour's domestic agenda, labelling the Government's immigration and environmental policies as "tragic mistakes".

The President claimed Britain was experiencing an invasion, stating: "Your country is being invaded by people from prisons, drug dealers, people from mental institutions."

He specifically criticised Sir Keir's decision to halt North Sea oil extraction as part of Net Zero commitments, describing such policies as "insane".

Despite his harsh words, Mr Trump insisted he "loves" Britain and wants to see the country thrive.

The President confirmed that the diplomatic tensions would have no bearing on King Charles's upcoming State Visit to America later this month, acknowledging that the monarch operates separately from political matters.

"I've known him for a long time. He's wonderful, wonderful person," Mr Trump said of the King.

Sir Keir's attempts to cultivate a positive relationship with Mr Trump have collapsed spectacularly, initially over American ambitions regarding Greenland and subsequently the Iran conflict.

The President branded the Prime Minister "no Churchill" and allegedly refers to him privately as a "loser",

Mr Trump last month shared a Saturday Night Live sketch portraying Sir Keir as a "coward" who was "out of his depth".

Meanwhile, the Prime Minister condemned Mr Trump's rhetoric about ending Iranian civilisation, telling MPs he would "never" use such language.

Ms Reeves yesterday expressed her anger at what she called the "folly" of launching military action without clear objectives or an exit strategy.