Reeves seeks breakthrough after IMF downgrade – Daily Business

Chancellor Rachel Reeves will arrive in Washington for talks on the global economy as the UK’s growth forecast for this year has been downgraded from 1.6% to just 1.1% by the International Monetary Fund (IMF).

Uncertainty caused by trade tariffs hangs over the meetings involving policymakers, the IMF and the World Bank.

The downgrade in the outlook for the UK is nevertheless ahead of predictions for France, Italy and Germany.

Ahead of her visit, Ms Reeves said: “This forecast shows that the UK is still the fastest growing European G7 country,” she said. “The IMF have recognised that this government is delivering reform which will drive up long-term growth in the UK, through our Plan for Change. 

“The report also clearly shows that the world has changed, which is why I will be in Washington this week defending British interests and making the case for free and fair trade.” 

William Bain, head of trade policy at the British Chambers of Commerce, said:  “The downgrades for both the UK and global economy should come as no surprise to anyone. Businesses are under no illusion that this year will be tough, and sustained growth is likely to be elusive.  

“Firms were already facing into a wall of higher domestic costs, including the national insurance rise, before the US unleashed its explosive tariff proposals. 

“But there is strong support for the Government’s approach to continue negotiation and not immediately retaliate. The US has been open to talks and the signals that a deal can be reached are promising. 

“Firms also don’t want to have all their eggs in one basket and are keen to see closer trading relationships with the EU and the Indo-Pacific region.”

Danni Hewson, head of financial analysis at investment platform AJ Bell, said: “After yesterday’s Wall Street rout, US markets have regained a decent amount of ground despite ongoing concerns about whether Donald Trump might ultimately find a way to fire the Fed chair.”

Amidst the uncertainty investors are piling into gold which pushed the spot price above $3,500 an ounce before giving up most of its gains in early afternoon trading.

London stocks had a pretty mixed day, while sterling hit a seven-month high against the dollar before slipping back in afternoon trading.

The FTSE 100 closed 52.94 points (0.64%) higher at 8,328.6 for the seventh consecutive day, notching its best run of gains in two years.

On Wall Street, stocks rebounded, erasing Monday’s losses after it emerged US Treasury Secretary Scott Bessent told some investors a tariff standoff with China was likely to de-escalate.

Shares in Elon Musk’s Tesla rose nearly 5% ahead of the EV firm’s first-quarter results due after the market closes.