April 25, 2025 • 13 mins
The Chancellor Rachel Reeves has been making the case for free trade in Washington at the IMF-World Bank Spring Meetings, using Britain's stability as a selling point. But Reeves also said Donald Trump has a point about the global trade system, as she meets key US officials. We discuss the Chancellor's trip and what it means for Britain's international relations with Bloomberg editorial board member Therese Raphael. Hosted by Stephen Carroll and Lizzy Burden.
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. Countries that have got
the space of fiscally should use it. The UK is
not one of those countries. Are as a share of
GDP is around one hundred percent. Rachel Reeves went all
the way to Washington, but she's still having to talk
(00:20):
about her budget problems at home. So what was the
chancellor is key message while in the United States. Hello,
you're listening to Bloomberg UK Politics. I'm Stephen Carroll and.
Speaker 2 (00:29):
I'm Lizzie Burden. Welcome to the program. So finance ministers
and central bankers from all over the world have been
in Washington this week for the IMF and World Bank
Spring meetings, and it is meant to be a moment
to discuss the state of the global economy, the shared
challenges that they're facing, and this year many of them
emanate from just down the road the White House thanks
(00:50):
to Donald Trump's trade war. Now the UK charlestor of
the checker, Rachel Reeves is certainly thinking about how to
minimize the damage to the UK potentially through a trade deal.
Speaker 1 (00:58):
Yeah, but look, as we heard right, also can't get
away from the issues at home work. You're pressing the
budget problems. It's quite right the UK doesn't have much
more room to borrow. We've heard that many times from
the Chancellor before, but to deliver it in those terms
I think was quite stark. The IMF itself didn't deliver
much good news for the UK either, cutting the growth
forecast for Britain by more than other European countries for
(01:21):
both this year and next. That's despite the UK getting
a lower tariff rate than just the ten percent versus
the twenty percent. Although now paused that the EU is
being subject to it's not all bad news comparatively the fund.
You'll say that Britain is on tract or grow faster
than Germany, France and Italy both this year and next year.
We're talking about growth of one point one and one
(01:41):
point four percent, So it's not massive numbers either, but
in the global context of how uncertain and how complicated
everything is, particularly with the trade story, that's where Britain
sits in the global rankings.
Speaker 2 (01:52):
So challenges are plenty. But did Reeves manage to stand
out in the crowd of countries looking for a deal.
We could talk now to Terrez Raphael, a member of
BEEN editorial board who joins US now for more? Did
Reeves have a clear message this week other than growth growth,
as it usually is.
Speaker 3 (02:07):
Yeah, it was an interesting It was an interesting one
from the Chancellor because on the one hand she gave
a nod to Trump, saying he was right to call
out trade and balances, especially with China. But in the
next breath she also doubled down on the need or
the defense of free trade and multilateral institutions. And that's
a fine line to walk. I think her advocacy for
(02:32):
free trade and her need to kind of tread this
line is a reflection of the economic reality of being
the chancellor of a mid sized, service oriented economy that
benefits significantly from open markets. Right. So, you know, Reeves
is trying to position the UK as a stable, cooperative
(02:53):
player and an increasingly fragmented global economy. But that's it's
a tough sell. The US is back in, you know,
in full tariff mode. The EU is building its own
sort of defenses of preparing.
Speaker 4 (03:08):
To impose retaliatory.
Speaker 3 (03:10):
Measures if there is no extension of that ninety day
pause of the reciprocal tariffs. And you know, China's increasingly
selective in its engagement and a tricky partner to trade with,
as my colleague Matthew Brooker wrote in a column today.
Speaker 4 (03:25):
Anyhow, so I.
Speaker 3 (03:26):
Think well Reads is right in principle, and you can
understand what she's trying to do there. You know, it
can sound a bit like whistling in the wind in
the current environment.
Speaker 1 (03:35):
Yeah, I mean, like it's interesting to think about the
line that rangel Reads in the UK more broadly, is
trying to walk in a very complex global picture. I mean,
how does that sort of messaging, the careful approach being
taken by the UK, how's that going to go down
in the White House?
Speaker 4 (03:55):
Yeah, And there's.
Speaker 3 (03:56):
Lots of talk about whether the UK will get special treatment,
and you know, it's a special relationship, Yeah, the special relationship,
lest we forget, and you know, there's there's always a
degree of truth to that, and it's always wildly exaggerated.
I mean, we know by now, don't we, that the
US plays by its own rules. And Trump's trade team
(04:18):
has made it very clear that you know, even if
you do get a little bit of you know, a warmth,
a sort of presidential cuddle off, that wherever possible, it
does not amount to sort of equal access and the
UK still faces those twenty five percent tariffs on steel
and aluminum. While you know it will Washington, you know,
(04:39):
wants to see the EU and the UK cut down tariffs.
Speaker 4 (04:43):
There's not really a lot.
Speaker 3 (04:45):
Of hope that that ten percent baseline tariff is going
to is going to drop. I think there will be, uh,
you know, I wouldn't be surprised if Reeves gets some
kind of maybe this trip soon, some kind of a
trade agreement with I think Trump does have warm feelings
towards the UK. He especially values his upcoming state visit.
(05:06):
We know that intelligence ties run very deep, and those
institutional bonds count for something. Still, you know, the US
still needs some friends in the world, So you know,
I wouldn't be shocked if something comes out of that.
But all of that said, I think the May nineteenth
summit with the EU is likely to matter more, and
you know, even Reeves kinds of indicates that in one
(05:30):
of her interviews, because you know, that's where real market
access and regulatory cooperation are at stake. So the U
S relationship is about, you know, it's it's an important relationship.
It's the largest single trading trading partner. Though the trade
with the EU is is bigger. But you know, I
think the EU is still the economic you know, battleground
(05:52):
for the UK.
Speaker 4 (05:53):
It's still a major focus.
Speaker 3 (05:55):
And I don't think what Trump would offer the UK
is going to move the new enormously in trade terms.
Speaker 2 (06:02):
I want to come back to the EU Terrez, But
I mean, I'm just thinking do warm feelings actually matter
at this point? There are so many people who are
tearing their hair out at Kirstarmer at this point, desperate
for him to do the Hugh Grant love actually moment
when you know, look at the tariffs, right, China seems
to have got the biggest carve out here when it's
(06:25):
the one with the biggest surplus. We're supposed to have
the special relationship and our tariffs are exactly the same.
Why not actually stand up to Donald Trump if he's
going to penalize you anyway.
Speaker 3 (06:36):
Yeah, I mean there's so many examples of cases where
the tariffs make, you know, make very little sense. Right.
We've heard lots of them, you know, from from you know,
islands with penguins and that sort of thing. I think
the UK doesn't want to be starmer and reeves are
(06:57):
going to great lengths to position the country as a bridge.
And you know, again you understand why given you know,
Britain sits outside the EU, it has this long standing
security partnership and other you know, political, geopolitical, uh based
relations with the US.
Speaker 4 (07:18):
I think it would take a lot more than what
than the.
Speaker 3 (07:21):
Sort of injustices and unfairness we've seen to have the
UK just walk away from that. There's there's just too
much at stake. But what we saw in Reeves's language
and in the kind of ramping up of talks ahead
of that May nineteenth summit, is that the UK is
now you know, spreading its bet as it were, and
(07:45):
looking for closer relations.
Speaker 4 (07:46):
With the with the EU. Reeves's you know, you take China.
Speaker 3 (07:52):
She's Reeves revived the UK China Economic and Financial Dialogue
in January after I think a five year freeze. Want
Chinese capital and export markets to become closer. I think
that that's a risk for this government, but you can
see that it's the strategy is just to kind of
make friends with everyone, try to be as open as
(08:15):
possible and trade with everyone, because that's what helps the
UK economy. Does it work with the US, does it
get them very far, it's you know, it doesn't seem
to at the moment.
Speaker 1 (08:24):
Like I was struck by the fact that Rachier reason
she was speaking of the British Embassy in Washington again
talking down China, criticizing China for its trade policies, persistent
trade surplaces and not always in her words, because of
transparent policies. Is that a reiteration of the UK's position,
or should we read that as also racher Reeves waving
(08:47):
a flag at Donald Trump and saying we do agree
with you on these points.
Speaker 3 (08:51):
I mean, it's so hard to know because we've just
recently seen the UK reaching out to China so vcipiously.
They want Sheen to list on the London Stock Exchange.
There's just a real sort of charm offensive on some front.
This may be a signal that that will be rained in.
(09:12):
I think what we know from Trump is that everything
is linked to everything else he cares about. So there
is no you know, meaningful trade concession without UK support
on other issues that are important to this White House,
and that will certainly mean some kind of you know,
retrenchment from ties with China. And if the key goal
(09:35):
or one of the major goals of this very radical
on this revolutionary white House, is to create some kind
of you know, is to isolate China, to contain China,
to change the way the rest of the world trades
with China. Then you can bet the UK will you know,
have a role to play on that and will be
(09:56):
expected to sign up to that for any trade, could
sessions or any other concessions.
Speaker 2 (10:01):
That are given Torez just to go back to the EU.
At this summit on May the nineteenth between the UK
and the EU that's happening in London, we're expecting a
deal where they finalize plans that have been brewing over
the past few weeks and we've had lots of scoops
on them from our Bloomberg UK government team. But in
exchange for the UK giving phishing rights to the EU,
(10:25):
we're expecting UK defense companies to qualify for access to
this one hundred and fifty billion euro defense fund. But
really my question to you is do you expect it
all to get over the line If they can't get
over the hairyous details like what to do about the
European Court of Justice.
Speaker 3 (10:42):
Yeah, I mean I think it would just be deeply,
deeply frustrating if in the current environment written in Europe
can't find common ground and agree on these on these
simple things.
Speaker 4 (10:56):
I mean, we know.
Speaker 3 (10:57):
There's a you and I both's got those Brexit years,
and you knew that the kind of the tensions, the
all of the frictions of those years, but those have
by and large fallen away to the extent that you know,
we can now you know, get to a point where
there is a discussion about more defense cooperation, which is,
(11:21):
let's face it, deeply needed. We're in a world where
the US is pulling away from its security ties to Europe.
We're not sure exactly the extent, but it's very clear
that Europe and that includes the UK, need to be
prepared to uh support their own defense needs and that
will require not just you know, the current defense deal
(11:44):
seems to be largely structured around giving Britain access to
a new you know, EU fund for procurement, but it
really needs those ties that need to go much deeper.
That it needs to be a reimagining of procurement rules
of the defense industrial base, which is you know, hugely
(12:04):
inefficient and full of duplications and lack of interoperability of
different forces. So there's such a need for a very
wide ranging rethinking of this agreement, and.
Speaker 4 (12:18):
You're absolutely right.
Speaker 3 (12:19):
If it founders over you know, fish and you know
important as that is, especially to France and some other countries,
then you know, I think the US will look at
it and say Europe is not serious about it's securing
its own defenses. It will not be able to be
serious about Ukraine if you can't just even agree with
(12:41):
its closest sort of friend and trading partner to make
changes that strengthen the you know, both the economies of
both sides. So I think this May nineteenth summit is
really important as an indicator of how willing they are
to put these sort of past disagreements to one side
and be practiced on both sides.
Speaker 1 (13:01):
Really well, indeed, with potentially other disagreements to be had
with other trading partners at the same time. Trez Raphael
from Bloomberg's editorial board, thank you very much for joining us.
That's it from us for today. If you like the program,
don't forget to subscribe. Give it five stars that other
people can find it wherever you listen to podcasts.
Speaker 2 (13:18):
This episode was produced by James Wilcock and our Audio
engineer was Andrew Gavin.
Speaker 1 (13:23):
I'm Mizzi Berden, and I'm Stephen Carroll. We'll be back
next week with more. This is Greenberg.
Bloomberg Audio Studios, podcasts, radio news. Countries that have got
the space of fiscally should use it. The UK is
not one of those countries. Are as a share of
GDP is around one hundred percent. Rachel Reeves went all
the way to Washington, but she's still having to talk
(00:20):
about her budget problems at home. So what was the
chancellor is key message while in the United States. Hello,
you're listening to Bloomberg UK Politics. I'm Stephen Carroll and.
Speaker 2 (00:29):
I'm Lizzie Burden. Welcome to the program. So finance ministers
and central bankers from all over the world have been
in Washington this week for the IMF and World Bank
Spring meetings, and it is meant to be a moment
to discuss the state of the global economy, the shared
challenges that they're facing, and this year many of them
emanate from just down the road the White House thanks
(00:50):
to Donald Trump's trade war. Now the UK charlestor of
the checker, Rachel Reeves is certainly thinking about how to
minimize the damage to the UK potentially through a trade deal.
Speaker 1 (00:58):
Yeah, but look, as we heard right, also can't get
away from the issues at home work. You're pressing the
budget problems. It's quite right the UK doesn't have much
more room to borrow. We've heard that many times from
the Chancellor before, but to deliver it in those terms
I think was quite stark. The IMF itself didn't deliver
much good news for the UK either, cutting the growth
forecast for Britain by more than other European countries for
(01:21):
both this year and next. That's despite the UK getting
a lower tariff rate than just the ten percent versus
the twenty percent. Although now paused that the EU is
being subject to it's not all bad news comparatively the fund.
You'll say that Britain is on tract or grow faster
than Germany, France and Italy both this year and next year.
We're talking about growth of one point one and one
(01:41):
point four percent, So it's not massive numbers either, but
in the global context of how uncertain and how complicated
everything is, particularly with the trade story, that's where Britain
sits in the global rankings.
Speaker 2 (01:52):
So challenges are plenty. But did Reeves manage to stand
out in the crowd of countries looking for a deal.
We could talk now to Terrez Raphael, a member of
BEEN editorial board who joins US now for more? Did
Reeves have a clear message this week other than growth growth,
as it usually is.
Speaker 3 (02:07):
Yeah, it was an interesting It was an interesting one
from the Chancellor because on the one hand she gave
a nod to Trump, saying he was right to call
out trade and balances, especially with China. But in the
next breath she also doubled down on the need or
the defense of free trade and multilateral institutions. And that's
a fine line to walk. I think her advocacy for
(02:32):
free trade and her need to kind of tread this
line is a reflection of the economic reality of being
the chancellor of a mid sized, service oriented economy that
benefits significantly from open markets. Right. So, you know, Reeves
is trying to position the UK as a stable, cooperative
(02:53):
player and an increasingly fragmented global economy. But that's it's
a tough sell. The US is back in, you know,
in full tariff mode. The EU is building its own
sort of defenses of preparing.
Speaker 4 (03:08):
To impose retaliatory.
Speaker 3 (03:10):
Measures if there is no extension of that ninety day
pause of the reciprocal tariffs. And you know, China's increasingly
selective in its engagement and a tricky partner to trade with,
as my colleague Matthew Brooker wrote in a column today.
Speaker 4 (03:25):
Anyhow, so I.
Speaker 3 (03:26):
Think well Reads is right in principle, and you can
understand what she's trying to do there. You know, it
can sound a bit like whistling in the wind in
the current environment.
Speaker 1 (03:35):
Yeah, I mean, like it's interesting to think about the
line that rangel Reads in the UK more broadly, is
trying to walk in a very complex global picture. I mean,
how does that sort of messaging, the careful approach being
taken by the UK, how's that going to go down
in the White House?
Speaker 4 (03:55):
Yeah, And there's.
Speaker 3 (03:56):
Lots of talk about whether the UK will get special treatment,
and you know, it's a special relationship, Yeah, the special relationship,
lest we forget, and you know, there's there's always a
degree of truth to that, and it's always wildly exaggerated.
I mean, we know by now, don't we, that the
US plays by its own rules. And Trump's trade team
(04:18):
has made it very clear that you know, even if
you do get a little bit of you know, a warmth,
a sort of presidential cuddle off, that wherever possible, it
does not amount to sort of equal access and the
UK still faces those twenty five percent tariffs on steel
and aluminum. While you know it will Washington, you know,
(04:39):
wants to see the EU and the UK cut down tariffs.
Speaker 4 (04:43):
There's not really a lot.
Speaker 3 (04:45):
Of hope that that ten percent baseline tariff is going
to is going to drop. I think there will be, uh,
you know, I wouldn't be surprised if Reeves gets some
kind of maybe this trip soon, some kind of a
trade agreement with I think Trump does have warm feelings
towards the UK. He especially values his upcoming state visit.
(05:06):
We know that intelligence ties run very deep, and those
institutional bonds count for something. Still, you know, the US
still needs some friends in the world, So you know,
I wouldn't be shocked if something comes out of that.
But all of that said, I think the May nineteenth
summit with the EU is likely to matter more, and
you know, even Reeves kinds of indicates that in one
(05:30):
of her interviews, because you know, that's where real market
access and regulatory cooperation are at stake. So the U
S relationship is about, you know, it's it's an important relationship.
It's the largest single trading trading partner. Though the trade
with the EU is is bigger. But you know, I
think the EU is still the economic you know, battleground
(05:52):
for the UK.
Speaker 4 (05:53):
It's still a major focus.
Speaker 3 (05:55):
And I don't think what Trump would offer the UK
is going to move the new enormously in trade terms.
Speaker 2 (06:02):
I want to come back to the EU Terrez, But
I mean, I'm just thinking do warm feelings actually matter
at this point? There are so many people who are
tearing their hair out at Kirstarmer at this point, desperate
for him to do the Hugh Grant love actually moment
when you know, look at the tariffs, right, China seems
to have got the biggest carve out here when it's
(06:25):
the one with the biggest surplus. We're supposed to have
the special relationship and our tariffs are exactly the same.
Why not actually stand up to Donald Trump if he's
going to penalize you anyway.
Speaker 3 (06:36):
Yeah, I mean there's so many examples of cases where
the tariffs make, you know, make very little sense. Right.
We've heard lots of them, you know, from from you know,
islands with penguins and that sort of thing. I think
the UK doesn't want to be starmer and reeves are
(06:57):
going to great lengths to position the country as a bridge.
And you know, again you understand why given you know,
Britain sits outside the EU, it has this long standing
security partnership and other you know, political, geopolitical, uh based
relations with the US.
Speaker 4 (07:18):
I think it would take a lot more than what
than the.
Speaker 3 (07:21):
Sort of injustices and unfairness we've seen to have the
UK just walk away from that. There's there's just too
much at stake. But what we saw in Reeves's language
and in the kind of ramping up of talks ahead
of that May nineteenth summit, is that the UK is
now you know, spreading its bet as it were, and
(07:45):
looking for closer relations.
Speaker 4 (07:46):
With the with the EU. Reeves's you know, you take China.
Speaker 3 (07:52):
She's Reeves revived the UK China Economic and Financial Dialogue
in January after I think a five year freeze. Want
Chinese capital and export markets to become closer. I think
that that's a risk for this government, but you can
see that it's the strategy is just to kind of
make friends with everyone, try to be as open as
(08:15):
possible and trade with everyone, because that's what helps the
UK economy. Does it work with the US, does it
get them very far, it's you know, it doesn't seem
to at the moment.
Speaker 1 (08:24):
Like I was struck by the fact that Rachier reason
she was speaking of the British Embassy in Washington again
talking down China, criticizing China for its trade policies, persistent
trade surplaces and not always in her words, because of
transparent policies. Is that a reiteration of the UK's position,
or should we read that as also racher Reeves waving
(08:47):
a flag at Donald Trump and saying we do agree
with you on these points.
Speaker 3 (08:51):
I mean, it's so hard to know because we've just
recently seen the UK reaching out to China so vcipiously.
They want Sheen to list on the London Stock Exchange.
There's just a real sort of charm offensive on some front.
This may be a signal that that will be rained in.
(09:12):
I think what we know from Trump is that everything
is linked to everything else he cares about. So there
is no you know, meaningful trade concession without UK support
on other issues that are important to this White House,
and that will certainly mean some kind of you know,
retrenchment from ties with China. And if the key goal
(09:35):
or one of the major goals of this very radical
on this revolutionary white House, is to create some kind
of you know, is to isolate China, to contain China,
to change the way the rest of the world trades
with China. Then you can bet the UK will you know,
have a role to play on that and will be
(09:56):
expected to sign up to that for any trade, could
sessions or any other concessions.
Speaker 2 (10:01):
That are given Torez just to go back to the EU.
At this summit on May the nineteenth between the UK
and the EU that's happening in London, we're expecting a
deal where they finalize plans that have been brewing over
the past few weeks and we've had lots of scoops
on them from our Bloomberg UK government team. But in
exchange for the UK giving phishing rights to the EU,
(10:25):
we're expecting UK defense companies to qualify for access to
this one hundred and fifty billion euro defense fund. But
really my question to you is do you expect it
all to get over the line If they can't get
over the hairyous details like what to do about the
European Court of Justice.
Speaker 3 (10:42):
Yeah, I mean I think it would just be deeply,
deeply frustrating if in the current environment written in Europe
can't find common ground and agree on these on these
simple things.
Speaker 4 (10:56):
I mean, we know.
Speaker 3 (10:57):
There's a you and I both's got those Brexit years,
and you knew that the kind of the tensions, the
all of the frictions of those years, but those have
by and large fallen away to the extent that you know,
we can now you know, get to a point where
there is a discussion about more defense cooperation, which is,
(11:21):
let's face it, deeply needed. We're in a world where
the US is pulling away from its security ties to Europe.
We're not sure exactly the extent, but it's very clear
that Europe and that includes the UK, need to be
prepared to uh support their own defense needs and that
will require not just you know, the current defense deal
(11:44):
seems to be largely structured around giving Britain access to
a new you know, EU fund for procurement, but it
really needs those ties that need to go much deeper.
That it needs to be a reimagining of procurement rules
of the defense industrial base, which is you know, hugely
(12:04):
inefficient and full of duplications and lack of interoperability of
different forces. So there's such a need for a very
wide ranging rethinking of this agreement, and.
Speaker 4 (12:18):
You're absolutely right.
Speaker 3 (12:19):
If it founders over you know, fish and you know
important as that is, especially to France and some other countries,
then you know, I think the US will look at
it and say Europe is not serious about it's securing
its own defenses. It will not be able to be
serious about Ukraine if you can't just even agree with
(12:41):
its closest sort of friend and trading partner to make
changes that strengthen the you know, both the economies of
both sides. So I think this May nineteenth summit is
really important as an indicator of how willing they are
to put these sort of past disagreements to one side
and be practiced on both sides.
Speaker 1 (13:01):
Really well, indeed, with potentially other disagreements to be had
with other trading partners at the same time. Trez Raphael
from Bloomberg's editorial board, thank you very much for joining us.
That's it from us for today. If you like the program,
don't forget to subscribe. Give it five stars that other
people can find it wherever you listen to podcasts.
Speaker 2 (13:18):
This episode was produced by James Wilcock and our Audio
engineer was Andrew Gavin.
Speaker 1 (13:23):
I'm Mizzi Berden, and I'm Stephen Carroll. We'll be back
next week with more. This is Greenberg.
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