Mr Balls added: “If you are a closed economy, like America, you can probably put up these barriers and carry on growing and the markets will let an American economy, at least for a while, have this more expansionary fiscal policy.
“Although … the consequence is higher interest rates globally, higher interest rates in American financial markets, potentially the US Federal Reserve taking its inflation target seriously causes quite a lot of grief further down the line for Donald Trump. But it is inflation, and that bite into cost of living, which causes him political problems if you believe he has just won a cost of living election.
“For the rest of the world, it may be more of a growth problem, that actually the impact of a more aggressive trade policy on open economies like the UK, economies which have been struggling to grow – unlike America in the last few years – maybe this is a hit to our growth.”
Asked whether he could see a state visit taking place in the next year, Mr Lammy said: “State visits take a while to organise. So in the next year, I’ve got to tell you, I think that would be a bit of a tall order.
“But he [Mr Trump] was genuine in his respect and his affection for the Royal family. It is always the case that, as head of state, the King plays an important role, and with our closest partner and with an American president coming into office for the second time… we want to be generous with our American friends as they will be, I imagine, with us, particularly in a second term.”