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the chancellor is in Washington where
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she's limbering up to lock horns with
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the self-styled master of the deal US
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President Donald Trump On the agenda
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cars chicken and tech taxes So do we
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fancy her chances welcome to the week in
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business with me Christian
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May Rachel Reeves has a busy couple of
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days in Washington where she's
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participating in the IMF's annual summit
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of finance ministers She'll also take
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the opportunity to try and get a US UK
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trade deal over the line Now let's take
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the IMF first After the international
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body slashed global growth forecasts in
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the wake of Trump's tariff chaos while
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they remain on the more optimistic side
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of economic forecasts they've still
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slashed their expectations of global
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growth from 2.7% this year to 1.8% as
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they warn of a significant slowdown in
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the world economy The IMF also cut its
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UK growth forecast from 1.6% 6% to 1.1%
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A chunky downgrade though still higher
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than many other economists are
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predicting More worryingly the IMF's
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economists expect the UK to take the
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crown for having the highest rate of
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inflation among the world's advanced
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economies this year at
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3.1% largely due to higher bills here in
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the UK The IMF also made it clear that
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the downgrade to the UK economy has more
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to do with domestic policy choices than
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the fallout from Trump's trade war Now
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as she huddles with other finance
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ministers the chancellor may take some
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comfort from the fact that our allies
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are facing similar economic challenges
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but she shouldn't kid herself The UK
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economy is in a pretty poor state and
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much of the blame for that lies with the
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chancellor and with this government Our
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public finances are in a dangerously
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weak position buckling under the
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combination of low growth high inflation
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and depressed business confidence The
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latest data this week revealed that UK
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annual borrowing has overshot official
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forecasts by 15 billion pounds coming in
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at a cool 151 billion in the year ending
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March up 20 billion quid on the previous
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financial year Much of this is
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attributed to a splurge in government
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borrowing just last month This makes the
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chancellor's ironclad fiscal rules even
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more challenging and it means more and
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more economists now expect a fresh wave
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of tax rises in the autumn budget with
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VAT and even income tax being discussed
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The government pledged during the
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election campaign and ministers
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including the chancellor have pledged
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many many times since including very
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recently that they won't touch VAT or
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income tax So could they really reach
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for these levers 6 months from now well
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they could just not with this chancellor
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still in post We shouldn't rule out a
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change at the Treasury between now and
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October's budget But let's stick with
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the present and the prospects of a US UK
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deal Not a fullyfledged trade deal but a
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deal possibly nonetheless God knows the
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chancellor could do with a win And she's
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saying the right things in Washington
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She said yesterday she believes in free
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trade and she wants to see tariff and
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non-tariff barriers reduced between the
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UK and the US Well so do I So should we
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all and fingers crossed that a deal
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emerges But what would it look like well
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the talk is that the UK is prepared to
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cut our own tariffs on US car imports So
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if you ever fancied driving an oversized
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topheavy SUV that risks rolling over on
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corners then stay tuned It might be
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about to get cheaper Currently we impose
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a tariff of 10% on US car imports Yes
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that's right We did tariffs too And
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reports suggest the government might
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reduce that to 2.5% in a bid to persuade
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the US to cut the new 25% levy it's
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imposed on imports of UK cars And don't
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forget the US is the largest export
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market for cars made here in Britain So
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there's a lot at stake Speaking of which
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beef is on the table along with chicken
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though not the chlorinated kind with the
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UK prepared to reduce the current 12%
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tariff it imposes on US agricultural
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products It seems that through the chaos
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of Trump's tariff tantrum small paths
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are opening up that could in fact reduce
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trade fiction in certain areas between
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certain countries Well that's the good
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news The bad news is that even if the UK
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strikes its own deal will still be hit
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hard by the inevitable slowdown in
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global growth and the increase in
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friction and disruption in global trade
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That's according to Bank of England
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Governor Andrew Bailey who warned
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yesterday that because the UK economy is
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so globally connected there's simply no
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way of shielding ourselves from global
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economic shocks All of which brings us
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back to the mess ministers have made of
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the UK economy Taxing jobs increasing
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regulations imposing new costs on
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businesses These are precisely the kind
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of policies you simply would not do if
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you were serious about growth So while I
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wish the chancellor well and sincerely
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hope she negotiates some trade boosting
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terms with the US we shouldn't be fooled
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that this emergency mercy mission
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constitutes anything more than a
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sticking plaster Meanwhile the UK
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economy needs some life-saving surgery
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and fast We're unlikely to get it from
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this government which despite some bold
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and welcome moves on long-term growth
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think about planning reform and
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infrastructure reform the government has
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still set us on a course of maximum
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damage with the prospect of more pain to
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come That's it from me this week Stay up
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to date and in the know with the city
5:21
app and on city.com and I'll see you
