Rachel Reeves is preparing for crucial talks with her US counterpart as she pushes to secure a trade deal amid economic uncertainty.
Official figures published on Wednesday showed the government borrowed more than expected for the latest financial year, the third-highest level of borrowing since 1947.
Activity across the UK’s private sector has also plunged to a more than two-year low as Donald Trump’s trade tariffs hammered exporters and caused a collapse in confidence.
The chancellor will have her first face-to-face meeting with US Treasury secretary Scott Bessent as she spends three days in Washington DC for the International Monetary Fund (IMF)’s spring meetings.
Her trip comes after the IMF slashed the UK’s economic growth forecast, warning that the fallout from Mr Trump’s trade war will hit Britain harder than the rest of Europe.
Mr Trump implemented 10 per cent levies on all UK goods as he announced sweeping tariffs on imports from the rest of the world earlier this month.
While ministers have said talks on a deal remain ongoing, figures in the Trump administration have cast doubt on their prospect of success.
Comment | ‘Security’ is a sound enough slogan – but can Labour deliver it?
Read the full Voices article from Andrew Grice:
US Treasury’s Bessent calls on IMF and World Bank to refocus on core missions
US Treasury Secretary Scott Bessent has called on the International Monetary Fund and World Bank to refocus on their core missions of macroeconomic stability and development, arguing that they have strayed too far into vanity projects such as climate change that have reduced their effectiveness.
Me Bessent, in remarks outlining his vision for US engagement with the IMF and World Bank on the sidelines of the institutions’ spring meetings, said that they serve critical roles in the international financial system.
“And the Trump administration is eager to work with them – so long as they can stay true to their missions,” Mr Bessent said.
“The IMF and World Bank have enduring value. But mission creep has knocked these institutions off course. We must enact key reforms to ensure the Bretton Woods institutions are serving their stakeholders – not the other way around,” he said, calling on U.S. allies to join the effort. “America First does not mean America alone.”
Why is Rachel Reeves in the US, and what is on the agenda?
Rachel Reeves will spend three days in Washington for the International Monetary Fund’s (IMF) spring meetings, which bring together finance ministers and business leaders from across the G7 and G20.
While she champions Britain as a destination for investment, Ms Reeves will also hold her first face-to-face meeting with American counterpart Scott Bessant for talks on an economic deal between the US and UK.
Securing such a deal with the US acquired a new sense of urgency earlier this month when Mr Trump announced the sweeping tariffs on imports from the rest of the world.
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.
IMF says tariff pressures to push global public debt past pandemic levels
Economic pressures from steep new US tariffs will push global public debt above pandemic-era levels to nearly 100 per cent of global GDP by the end of the decade as slower growth and trade strain government budgets, the International Monetary Fund has said.
The IMF’s latest Fiscal Monitor projected that global public debt will grow 2.8 percentage points to 95.1 per cent of global GDP in 2025. It said the upward trend was likely to continue, reaching 99.6 per cent of global GDP by 2030.
Global public debt peaked in 2020 at 98.9 per cent of GDP as governments borrowed heavily for COVID-19 relief and output shrank. Debt fell 10 percentage points within two years.
“Major tariff announcements by the United States, countermeasures by other countries, and exceptionally high levels of policy uncertainty, are contributing to worsening prospects and heightened risks,” the IMF said in the report.
It added that this leaves governments with more difficult trade-offs as their budgets are stretched by higher defense spending needs, demands for more social support and rising debt service costs that could grow with more inflationary pressures.
How the UK’s growth forecast compares to countries across the world
Global growth is projected to fall from 3.3% in 2024 to 2.8% in 2025, before edging up to 3% in 2026.
This is lower than the IMF’s previous forecasts, published in January, by 0.5 percentage points for 2025 and 0.3 percentage points for 2026.
The outlook for nearly all countries has been downgraded, reflecting the direct effect of new trade measures and the knock-on impact on uncertainty, which has surged to “unprecedented” levels, and deteriorating sentiment among consumers and businesses.
Growth will nonetheless be stronger in the UK than Germany – which is predicted to flatline this year – France, and Italy.
Are MPs being denied a meaningful vote on a Trump deal?
Keir Starmer was pressed in PMQs today on whether MPs would get a vote on a trade deal with Donald Trump.
Given the consequences of such a deal on issues like food standards, privacy issues, data and jobs the question by Lib Dem leader Sir Ed Davey should have been a direct “yes!”
But Sir Keir was in a non-committal mood as he often is with his response to Sir Ed.
Keir Starmer has failed to commit to a vote in Parliament on any Trump trade deal, after being asked by Liberal Democrat Leader Ed Davey at PMQs today.
Starmer simply said the government is making progress and there would be a “process if a deal is reached.”
Sir Ed responded: “It is really worrying that Keir Starmer wouldn’t commit to a vote in Parliament on a Trump trade deal. If the government really thinks this will be a good deal for Britain, what are they so afraid of?
“British farmers, online safety rules for children and tax cuts for tech barons are all apparently being used as bargaining chips in these negotiations. It would be an affront to democracy if MPs are bypassed and the government rams through a deal with Trump without proper scrutiny.”
Comment | It’ll take a miracle for the economy to grow under Rachel Reeves
Read the full voices article from Sean O’Grady here:
‘Pip should not cause an increase in poverty’ says former shadow minister
A Labour former shadow minister said the Government’s proposed changes to personal independence payments (Pip) should not cause an increase in poverty.
Andy McDonald, who held an employment rights brief in opposition, asked the Prime Minister if MPs will see new Office for Budget Responsibility (OBR) analysis on the changes.
He said: “After 14 years of Conservative government too many of my Middlesbrough and Thornaby East constituents are on low incomes or in real poverty. I very much welcome the employment support proposals in the welfare Green Paper, but the Government has to be clear about the real opportunities it’s offering more than three million families who it says will lose out financially as a result of this package.
“So before asking MPs to vote, can he confirm that we will see fresh OBR analysis, evidence on who will be affected by the Pip changes, and the Government’s own assessment of the employment impact of its measures, and will he confirm that this policy will not result in increased experience of poverty?”
Sir Keir Starmer said the Government had introduced £1 billion of tailored employment support and more money for those with lifelong disabilities who are unable to work. He said working halves people’s risk of poverty.
Sir Keir said: “We are reforming a broken system, the system we inherited, and I think most people accept that it needs reform because it traps people in unemployment and inactivity, and we need to reform it for that reason. The principles will be that we will provide support where support is needed.”
Analysis | Rachel Reeves is besieged on all sides and needs a dramatic intervention to save UK economy
When Rachel Reeves turns up at the International Monetary Fund (IMF) today she already knows that she needs a near miracle to turn things around, our political editor David Maddox writes.
For a woman whose mantra during and after the election was “growth! growth! growth!” the news could not be worse for the chancellor, he says.
Read the full analysis below:
Analysis | Labour MPs beginning to speak out on welfare cuts
Scarborough and Whitby MP Alison Hume’s attack on her party’s government over welfare cuts is a bad sign for Keir Starmer.
It shows that Labour MPs are becoming more comfortable with attacking the party leadership over harsh measures to try and balance the books on the economy.
Ms Hume wanted to make sure that people with learning disabilities will not lose out from cuts to disability payments. The truth is they almost certainly will.
It is an early sign that the current economic policy is causing political problems for Sir Keir and his beleaguered chancellor Rachel Reeves who may soon be looking for more welfare cuts.
