Rachel-Reeves (Image: Getty)
CHANCELLOR Rachel Reeves faces a nightmare day as she meets fellow finance ministers in Washington and push for a US trade deal.
The brutal reality of Labour’s economic woes will be laid bare by global finance body the International Monetary Fund (IMF) when it sets out its latest economic forecasts. They are expected to reveal the UK will continue to struggle for the rest of the decade which would blow a massive hole in Keir Starmer’s attempts to be re-elected for a second term.
The situation has grown even worse thanks to US President Donald Trump's trade tariffs and, in the last few days, his criticism of Federal Reserve Chair Jerome Powell, the head of America's central bank, which have caused stock markets to crash.
Ms Reeves will hold her first face-to-face meeting with American counterpart Scott Bessant for talks on an economic deal between the US and UK. Her top priority is to get an end to the 25% tariffs on steel and cars, and the US has also impose 10% levies on other UK good.
The Chancellor is to spend three days in the US capital for the IMF's spring meetings, which bring together finance ministers and business leaders from across the G7 and G20.
Ms Reeves said: "The world has changed and we are in a new era of global trade. I am in no doubt that the imposition of tariffs will have a profound impact on the global economy and the economy at home.
"This changing world is unsettling for families who are worried about the cost of living and businesses concerned about what tariffs will means for them. But our task as a Government is not to be knocked off course or to take rash action which risks undermining people’s security.
“Instead, we must rise to meet the moment and I will always act to defend British interests as part of our plan for change."
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Jonathan Walker
Europe must 'step up' says Keir Starmer
Sir Keir Starmer has said that Europe needs to “step up” on both security and trade, ahead of an expected meeting with the President of the European Commission later this week.
Brussels has confirmed that Ursula von der Leyen is due to meet the Prime Minister in London on Thursday, a trip that comes just weeks before a full UK-EU summit planned for May 19.
Ministers have said they want to improve the UK’s relationship with the continental bloc, on matters across trade, defence, and border security.
Sir Keir said: “We want to reset our relations with Europe, to improve those relations.
“That’s been brought into sharp focus in the last three or four months on the question of security and defence, we have to recognise we’re moving into a new era where all Europeans need to step up on security and defence, and that’s the discussions we’re having with the EU and others.
“I also think on trade and the economy that we need to step up and reset.
Jonathan Walker
Conservatives say Labour has ruined business confidence
Mel Stride MP, Shadow Chancellor, said: "The latest IMF outlook is a worrying indictment of Labour’s economic approach. Less than a year into their government, Britain is already seeing the consequences of Labour’s high-tax, high-spend agenda.
"The IMF has downgraded the UK’s growth forecast, raising serious concerns about the lack of confidence and direction under Labour. They have also revised up significantly their forecast for inflation. At a time when families are looking for stability and support, Labour’s policies are stifling growth, pushing up the cost of living and leaving us vulnerable to external shocks.
"This government inherited the fastest growing economy in the G7 and inflation was bang on target. Instead of building on that progress, Labour is taking Britain backwards with reckless spending, higher inflation and no credible plan for growth.
"Under Kemi Badenoch's leadership, the Conservative Party will fight for a stronger, lower-tax economy that rewards hard work, encourages investment, and delivers for the British people."
Jonathan Walker
UK has highest rate of inflation in G7
Inflation forecasts have been revised upwards for advanced economies since January, with the UK and the US being hit hardest.
UK inflation is set to be 0.7 percentage points higher this year, compared with the previous forecast, at 3.1% – largely due to prices like water and electricity rising from April.
This is higher than all other countries in the group of seven advanced economies (G7), which incorporates Germany, France, Italy, Japan, Canada, and the US.
Chancellor of the Exchequer Rachel Reeves said the new forecasts show “the UK is still the fastest-growing” European country in the G7.
Jonathan Walker
IMF cuts global growth forecasts
US tariffs leading to global trade disruption and unprecedented uncertainty is set to significantly slow growth in economies around the world, the International Monetary Fund (IMF) has warned.
The organisation said it is slashing its global growth forecast by 0.5 percentage points this year, with nearly all countries seeing a downgrade.
The latest World Economic Outlook report was produced under “exceptional circumstances”, with the IMF being forced to change its projections after US President Donald Trump unveiled a range of new and higher tariffs earlier this month.
Jonathan Walker
UK growth to be less than forecast
The UK economy is predicted to grow by 1.1% this year, 0.5 percentage points less than January’s forecast, partly reflecting tariffs, as well as weaker consumption amid higher inflation driven by bills and energy price hikes.
Growth will nonetheless be stronger in the UK than Germany – which is predicted to flatline this year – France, and Italy.
Jonathan Walker
Households cut spending as cost of living bites
More than two fifths of households are having to cut spending on food and other essentials as a result of rising energy bills, research has found.
A third of households across Scotland are finding it difficult to afford their energy bills, the Scottish Climate Survey for 2024 revealed.
More than half (51%) of those who rent their home are struggling with the cost, the research found, along with 49% of those in households whose income is less than £26,000 a year and 46% of disabled people.
The research, published by the Scottish Government, added that 42% of households were “having to cut back spending on food and other essentials as a result of the need to spend more on energy bills”.
Jonathan Walker
Could a trade deal be just weeks away?
It was previously reported that Donald Trump plans to sign a trade deal with the UK in just three weeks. Britain is set for a rapid deal, according to reports. It comes after US vice president JD Vance said the US is “working very hard” on a trade deal with the UK thanks partly to the President’s love of the royal family.
Read more about a possible trade deal here.
Jonathan Walker
Inflation could fall says Bank of England expert
A Bank of England policymaker said US trade tariffs are more likely to push down on UK inflation than to push it up, but that there are risks on both sides.
Speaking to Bloomberg, Megan Greene said: “The tariffs represent more of a disinflationary risk than an inflationary risk.”
However, she added: “There’s a ton of uncertainty around this, but there are both inflationary and disinflationary forces.”
She said potential outcomes like export substitution would likely push inflation down, while “trade diversion from other countries that are trying to find a new home for their markets, that also pushes down on inflation”.
Meanwhile, “a re-patterning of supply chains can push up on inflation”, while trade fragmentation more widely “reduces potential growth, that tends to be inflationary”.
David Williamson
Will the Chancellor preside over a surge in child poverty?
Rachel Reeves's attention is focused on protecting the national finances, encouraging growth and securing a deal with US - but charities are warning Labour faces a legacy-defining disaster for British children.Major charities have joined forces to warn of the impact of keeping the two-child benefit cap in place.They state: “If it is not scrapped, the stark reality is that child poverty will be significantly higher at the end of this parliament than when the government took office, making this the first time a Labour government would leave such a legacy, and the number of children living in poverty will be at its highest since records began.”
Jonathan Walker
What Rachel Reeves will say in Washington
Senior Political Correspondent Christian Calgie has previewed the Chancellor's Washington trip.
He says Rachel Reeves is to make the case for free global trade at the International Monetary Fund’s spring meeting in Washington DC, as she hopes to get a trade deal with the US over the line. The Chancellor has jetted out to the United States as Britain hopes to ramp up the pressure to get a deal signed with President Trump.
Ms Reeves will urge the White House to slash its tariffs, with UK trade officials hoping that an FTA might see some relief for Britain’s car, steel and pharmaceutical manufacturers. However there is little hope that any trade deal would see the blanket 10% tariffs lifted from the rest of Britain’s economy.
Read more about the visit here.
David Williamson
Pound hits a seven month high against the dollar
Concern that President Trump may be trying to fire Jerome Powell, the chairman of the interest rates-setting Federal Reserve to have hit the value of the dollar. Sterling is now at its highest level since September ($1.342).
Jonathan Walker
Trump crashes US stock markets and pension funds
Wall Street weakened on Monday as investors worldwide become more sceptical about US investments because of President Donald Trump’s trade war and his criticism of the Federal Reserve, which are shaking the traditional order.
The S&P 500 sank 2.4% in another wipe out. That yanked the index that’s at the centre of many 401(k) accounts 16% below its record set two months ago.
The Dow Jones Industrial Average dropped 971 points, or 2.5%, while losses for Tesla and Nvidia helped drag the Nasdaq composite down 2.6%.
The falls mean pension funds across the world fell in value.
Perhaps more worryingly, US government bonds and the value of the US dollar also sank as prices retreated across US markets.
It’s an unusual move because Treasurys and the dollar have historically strengthened during episodes of nervousness.
This time around, though, it’s policies directly from Washington that are causing the fear and potentially weakening their reputations as some of the world’s safest investments.
Jonathan Walker
Doubts about US Trade deal
While UK ministers have said talks on a deal remain ongoing, figures in the Trump administration have cast doubt on their prospect of success.
Although Mr Trump rowed back from his initial announcement, instead instituting 10% tariffs on all countries except China, his senior economic adviser Kevin Hassett has suggested this is a “baseline” which would require an “extraordinary deal” for the president to go below.
Mr Trump himself has said he is in “no rush” to negotiate exceptions to the tariff regime due to the revenues he claimed the charges were generating.
Jonathan Walker
UK also wants trade deal with India
As well as seeking to make progress on a US deal, Ms Reeves is also expected to discuss improving trading relations with other nations – something she has previously said the Government is keen to do.
Earlier in April, she hosted India’s finance minister for talks on a potential free trade agreement and trade is expected to feature heavily at a UK-EU summit in May.
