The Chancellor will meet America’s top economic official, Treasury secretary Scott Bessent, today as she concludes her trip to the International Monetary Fund’s Spring Meetings in Washington. As discussed on Coffee House this week, Rachel Reeves will use her meeting to attempt to make an Anglo-American trade deal a realistic possibility.
Yesterday, the Chancellor put in a surprise appearance on one of Donald Trump’s favourite news channels, Newsmax, and said she understood that both her government and the Trump administration were elected by voters who felt globalisation had not worked for working people. The tone of her interview was very much aimed at the President and his team.
But speaking to an audience closer to home on the BBC, she highlighted the importance of our commercial links with Europe instead, saying: ‘I understand why there’s so much focus on our trading relationship with the US, but actually our trading relationship with Europe is arguably even more important.’
The different messages Reeves is conveying on broadcast rounds on both sides of the Atlantic demonstrate the two horses Labour are trying to ride. A closer relationship with America almost certainly requires us to drop our regulatory standards (though Reeves has ruled out importing chlorinated chicken or hormone-addled beef), while lining up more with Europe almost certainly requires tougher regulation. If squaring that circle is even possible it’ll be a noble achievement.
When the Chancellor wakes up in America she’ll be briefed on her first bit of good economic news this week from back home: retail sales on our high streets and online shops have risen at their fastest pace since the pandemic, according to figures from the Office for National Statistics. Sales volumes increased – against expectation – by 0.4 per cent in March after rising by 0.7 per cent in February. Analysts had expected retail sales to decline, but warmer weather boosted sales in garden centres and fashion stores, according to ONS statisticians, bringing the whole retail sector up.
It’s been a pretty gloomy year for economic news so far, but three promising developments now – two on retail sales and an unexpectedly boosterish growth figure recorded in February – mean that Reeves somehow manages to return home with the outlines of a trade deal, she might just begin to turn around her reputation as one of Britain’s most beleaguered chancellors.
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