British Chancellor of the Exchequer Rachel Reeves attended the 11th China-UK Economic and Financial Dialogue in Beijing, China on January 11, 2025.
Pool | Getty Images News | Getty Images
Britain’s finance minister told CNBC on Wednesday that Britain “is not part of the problem” when it comes to the “ongoing” trade deficit that President Donald Trump wants to address.
“I do understand that President Trump is concerned about a large and persistent surplus in the trade balance with the United States,” UK Finance Minister Rachel Reeves told CNBC’s Andrew Ross Sorkin. countries, but this is not the case in the UK.
“We are not part of the problem here. So we in the UK increased trade with President Trump when he last came into office,” she told CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.
President Trump is very angry about the trade deficits the United States has with many of its partners. But trade with Britain is more balanced overallIn recent years, there has been a tug-of-war between surplus and deficit.
Latest UK trade data It shows that in the second quarter of 2024, the UK’s goods trade surplus with the United States was 4.5 billion pounds (5.5 billion US dollars).
So while China, Mexico, Canada and the European Union are seen as top targets of Trump’s trade tariffs, Economists believe Britain may escape relatively unscathed. Reeves expressed optimism about the prospects for UK-US trade.
Reeves commented: “Our two great countries have such a strong and special relationship and there is absolutely no reason why trade flows can’t increase again.”
The UK’s finance minister is attending Davos this week to try to attract global investment into the UK economy.
To grow the economy, she said, “we need more investment in the UK, so my message to US investors and global investors is: the UK is open for business and we want your investment.”
The trip comes after Reeves has been under sustained pressure since he unveiled Treasury spending and tax plans last fall.
package of measures Presented in the Autumn Budget The bill focuses on increasing the tax burden on UK businesses and has drawn widespread criticism from industry leaders who say the move will stifle investment, jobs and growth.
Recently released data, including Growth is lower than expected November and Government borrowing costs higher than expected December’s events also added to the Treasury’s ongoing uneasiness.
bond storm
Britain found itself in more trouble at the start of the year as the interest rates investors needed to hold British bonds, known as gilts, rose sharply, reflecting uneasiness about the country’s economic prospects.
Reeves stuck to her fiscal plan, saying growing the British economy was her top priority.
Commenting on the recent market turmoil in Phnom Penh on Wednesday, the minister said the country was “not immune to what is happening in global markets”.
“What I will say, however, is that in my budget in October, I set out the fiscal rules under which this government will operate. Those fiscal rules are to use tax revenues to pay for day-to-day spending and to reduce our debt as a share of gross domestic product. Proportional Value – These fiscal rules are the cornerstone of economic and fiscal stability, they are non-negotiable and we will continue to meet them.
The election of Donald Trump last November has created new headaches for the centre-left Labor government, with foreign minister David Lamy and other ministers making less than flattering comments about Trump in the past.
In terms of political ideology, Prime Minister Keir Starmer, Reeves and the British establishment are unnatural partners as they seek a good relationship with the White House, especially amid the potential threat of widespread trade tariffs.
The Labor government has been under attack in recent months from close Trump ally Elon Musk, with the tech billionaire criticizing Prime Minister Starmer and Britain’s past investigations into child sexual exploitation.
Asked what he thought of Musk’s intervention, Reeves said Musk was “entitled to his opinion, but he was not one of the people who voted in the UK general election”.
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—CNBC’s Ruxandra Iordache contributed to this report
