UK economy faces growth shock from Trump tariffs, says Bank governor
The Bank of England’s governor, Andrew Bailey, has said the UK economy faces a “growth shock” as a result of Donald Trump’s trade policies.Speaking on the sidelines of the International Monetary Fund (IMF) meetings in Washington, Bailey said that while he did not think the UK was close to recession at the moment, “we are certainly quite focused on the growth shock”.The IMF earlier this week downgraded its 2025 growth forecast for the UK to 1.1%, from the 1.6% it had been expecting as recently as January before the tariffs were announced.
Britain’s economy has struggled for momentum since Labour’s general election victory last July.National output has come close to stagnation in the second half of last year amid weakness in consumer confidence.The IMF downgrade followed similar deep negative revisions by the Bank and the government’s independent forecaster, the Office for Budget Responsibility.However, recent figures showed the economy recovered at a faster rate than expected in February.While Labour has made rebooting economic growth its number one mission for government, experts say Trump’s increasingly erratic trade wars could torpedo the world economy, including sapping growth in Britain.
Rachel Reeves, the chancellor, is expected to discuss the prospects for a US-UK trade agreement when she meets the US Treasury secretary, Scott Bessent, this week but she said on Wednesday that the UK was “not going to rush” into a deal.Britain is hoping to persuade Trump to relent on a 25% tariff on UK car imports to the US, which British manufacturers have warned could lead to imminent job losses if it is not lifted.It is unclear whether Washington is prepared to discuss exemptions from the 10% base tariff it has imposed on all countries, including the UK.Reeves signalled she would be prepared to cut tariffs on imports of some US products if it helped to seal an agreement, but she has insisted food standards and other regulations are not up for negotiation.The UK has already offered other concessions, including reducing the £1bn digital services tax, which hits US tech firms.
Bailey, speaking to CNBC television, said he would be “very encouraged if the UK does make a deal” but stressed that as an open economy, the UK would still be hit as global growth slows down.He said the Bank’s policymakers would have to weigh the risks to growth against an expectation of rapidly rising inflation.“We’ve got to balance those two.But I think the trade issue is the new part of that story,” he said.Speaking at an IMF panel event, Reeves said she shared some of the White House’s concerns about persistent trade deficits in the global economy, and accepted that Trump had a mandate to change things.
“There’s been a feeling in my country, and in America and in many other developed countries, that the system we have today delivers for some but not for all, and jobs have been hollowed out in some sectors of the economy,” she said,“It does matter where things are made and who makes them, and we can’t be agnostic or naive about that,”But she said tariffs were “blunt instruments” for dealing with imbalances, calling instead for dialogue,She also confirmed that the UK has no intention of retaliating against US tariffs,“We think that ratcheting up benefits no one, and instead we’re approaching the dialogue with cool heads and a pragmatic realism about what we want to achieve,” she said.
Appearing on the panel alongside Reeves, the IMF’s managing director, Kristalina Georgieva, praised the UK’s growth policies,“What Rachel is doing to lift up growth in the UK, she’s tackling very tough issues: getting reprioritisation of spending, getting the regulatory environment to be more rational, and then taking on the battle to get it done – and it’s really impressive,”
Tory mayor joins calls for deal with Reform UK at next general election
Ben Houchen, a Conservative mayor, has joined calls for his party to make some kind of deal with Nigel Farage’s Reform UK before the next election.The Tees Valley mayor, who is the Tories’ most powerful elected politician, said he wanted to see a coming together of the two rightwing parties.He told Politico: “I don’t know whether it’s a merger … [or] a pact of trust and confidence or whatever … But if we want to make sure that there is a sensible centre-right party leading this country, then there is going to have to be a coming together of Reform and the Conservative party in some way. What that looks like is slightly above my pay grade at the moment.”His comments came after Robert Jenrick, the shadow justice secretary, was recorded saying he wanted to unite the coalition on the right of politics “one way or another”
Starmer and Reeves try to ride three horses with US, EU and China trade ties
Riding two horses is hard enough, but diplomats are joking in private that Keir Starmer and Rachel Reeves are trying to ride three.At the International Monetary Fund summit in Washington this week, Reeves sought to position the UK as a beacon of free trade that is open to business with the EU, US and China.Riding those three horses is central to the government’s strategy for boosting growth and navigating the international stage at a time when old alliances are being upended and the post-cold war order redrawn.What Reeves did not address is that the UK is being pulled in opposing directions that may soon force ministers to make choices between Brussels, Washington and Beijing.Before the chancellor’s trade talks with the US treasury secretary, Scott Bessent, on Friday, it emerged that the US was pushing the UK to relax its rules on agricultural imports – the rules that ban chlorine-dipped chicken and hormone-treated beef from being sold in British supermarkets
UK politics: Reform will axe councils’ special needs funding if they win in local elections, Lib Dems claim – as it happened
The National Autistic Society has described Nigel Farage’s comments about Send children (see 12.09pm) as “wildly inaccurate” and accused him of perpetuating “stigma” and making life harder for disabled people. Mel Merritt, head of policy and campaigns at the NAS, said:Nigel Farage’s comments are wildly inaccurate and show that he’s completely out of touch with what autistic children and adults have to go through to get a diagnosis or any support at all.For the record, absolutely no one has got an autism diagnosis through the GP – this is just incorrect, wrong, fake news.Children with Send and disabled adults, including autistic people, are not victims who are being ‘over diagnosed’
Charities attack Farage claims of ‘mental illness problems’ overdiagnosis
Nigel Farage says the UK is “massively overdiagnosing those with mental illness problems” and creating a “class of victims”.In comments, which have drawn criticism from campaigners and charities, the leader of Reform UK said it was too easy to get a mental health diagnosis from a GP.“It’s a massive problem. I have to say, for my own money, when you get to 18 and you put somebody on a disability register, unemployed, with a high level of benefits, you’re telling people aged 18 that they’re victims,” he told a local elections press conference in Dover.“And if you are told you’re a victim, and you think you’re a victim, you are likely to stay [a victim]
Lowering the voting age will benefit democracy | Letters
Simon Jenkins disagrees with the government’s proposal to reduce the voting age to 16 (Votes for 16-year-olds? Sorry, but I’m not convinced, theguardian.com, 17 April). But the voting age of 18 is an arbitrary threshold. Quite a recent one too – until 1969 the minimum voting age in Britain was 21. Other countries have minimum voting ages from 16 to 21
Nige doubling up, Dicky in No 11 and 30p Lee at foreign? Run for the hills! | John Crace
With two opinion polls giving the Reform party a clear lead over Labour and the Conservatives, it may be time to start thinking about some practicalities. Like, just who will be doing what job in a Reform-led government?It can probably be taken it as read that Nigel Farage will be prime minister, but that leaves three MPs – make that two, as James McMurdock isn’t trusted enough by his colleagues to be allowed out in public – to fill the remaining 20-plus cabinet posts. Unless we take it that two dozen or so newly elected MPs with no experience of anything will be drafted in by Nige after the 2029 election. Run for the hills, everyone.It’s probably fair to assume that Richard Tice has his eyes on becoming chancellor
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