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Mission: Impossible? Chancellor heads to the IMF with a very big challenge – and she’s not alone
There will be much to chew over at the International Monetary Fund’s (IMF) spring meetings this week.
Central bankers and finance ministers will descend on Washington for its latest bi-annual gathering, a place where politicians and academics converge, all of them trying to make sense of what’s going on in the global economy.
Everything and nothing has changed since they last met in October.
One man continues to dominate the agenda.
Six months ago, delegates were wondering whether Donald Trump could win the November election and what that might mean for tax and tariffs. How far would he push it? Would his policy match his rhetoric?
Donald Trump. Pic: Reuters
This time round, expect iterations of the same questions. Will the US president risk plunging the world’s largest economy into recession?
Yes, he put on a bombastic display on his so-called “Liberation Day”, but will he now row back? Have the markets effectively checked him?
Behind the scenes, finance ministers from around the world will be practising their powers of persuasion, each jostling for meetings with their US counterparts to negotiate a reduction in the tariffs set by the Trump administration.
That includes our own chancellor, Rachel Reeves, who is still holding out hope for a trade deal with the US – although she is not alone in that.
Read more:
PM and Trump step up trade talks
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Could Trump make a deal with UK?
Are we heading for a recession?
The IMF’s economists have already made up their minds about Trump’s potential for damage.
Last week, they warned about the growing risks to financial stability after a period of turbulence in the financial markets, induced by Trump’s decision to ratchet up US protectionism to its highest level in a century.
By the middle of this week the organisation will publish its World Economic Outlook, in which it will downgrade global growth but stop short of predicting a full-blown recession.
Others are less optimistic.
Kristalina Georgieva, the IMF’s managing director, said last week: “Our new growth projections will include notable markdowns, but not recession. We will also see markups to the inflation forecasts for some countries.”
She acknowledged the world was undergoing a “reboot of the global trading system,” comparing trade tensions to “a pot that was bubbling for a long time and is now boiling over”.
She went on: “To a large extent, what we see is the result of an erosion of trust – trust in the international system, and trust between countries.”
IMF managing director Kristalina Georgieva. Pic: Reuters
Don’t poke the bear
It was a carefully calibrated response. Georgieva did not lay the blame at the US’s door and stopped short of calling on the Trump administration to stop or water down its aggressive tariffs policy.
That might have been a choice. To the frustration of politicians past and present, the IMF does not usually shy away from making its opinions known.
Last year it warned Jeremy Hunt against cutting taxes, and back in 2022 it openly criticised the Liz Truss government’s plans, warning tax cuts would fuel inflation and inequality.
Taking such a candid approach with Trump invites risks. His administration is already weighing up whether to withdraw from global institutions, including the IMF and the World Bank.
The US is the largest shareholder in both, and its departure could be devastating for two organisations that have been pillars of the world economic order since the end of the Second World War.
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Here in the UK, Andrew Bailey has already raised concerns about the prospect of global fragmentation.
It is “very important that we don’t have a fragmentation of the world economy,” the Bank of England’s governor said.
“A big part of that is that we have support and engagement in the multilateral institutions, institutions like the IMF, the World Bank, that support the operation of the world economy. That’s really important.”
The Trump administration might take a different view when its review of intergovernmental organisations is complete.
That is the main tension running through this year’s spring meetings.
How much the IMF will say and how much we will have to read between the lines, remains to be seen.
It’s no great surprise that members of a Labour MPs’ LGBT+ WhatsApp group would be raising concerns about the impact of this week’s Supreme Court ruling on the trans community.
But the critical contributions reportedly made by some of the group’s higher-profile ministerial members highlight the underlying divisions with the Labour Party over the issue – and point to future tensions once the practical implications of the judgement become clear.
Messages leaked to the Mail on Sunday allegedly include the Home Office minister Dame Angela Eagle writing “the ruling is not as catastrophic at it seems but the EHRC [Equality and Human Rights Commission] guidance might be & there are already signs that some public bodies are overreacting”.
Culture minister Sir Chris Bryant reportedly replied he “agreed” with another MP’s opinion that the EHRC chair Baroness Falkner was “pretty appalling” when she said the ruling would mean trans women could not use single-sex female facilities or compete in women’s sports.
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Gender ruling – How it happened
Government sources argue these messages are hardly evidence of any kind of plot or mass revolt against the Supreme Court’s ruling.
But they still raise uncomfortable questions for a party that has been on a tortuous journey over the issue.
Under Jeremy Corbyn, Labour was committed to introducing self-identification – enabling people to change their legal sex without a medical diagnosis – a position dropped in 2023.
Back in 2021, Sir Keir Stamer said the then Labour MP Rosie Duffield was “not right” to say “only women have a cervix”. But three years later he acknowledged that “biologically, she of course is right”.
Duffield, who now sits as an independent, is asking for an apology – but that doesn’t seem to be forthcoming from a government keen to minimise its own role in changing social attitudes to the issue.
The Conservative position on this has also chopped and changed – with Theresa May‘s support for gender self-ID ditched under Boris Johnson.
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As the Conservatives’ equalities minister, Kemi Badenoch led the UK government’s fight against Scotland’s efforts to make it easier to change gender – and she’s determined to punch Labour’s bruise on the issue.
This weekend, she’s written to the cabinet secretary calling for an investigation into a possible breach of the ministerial or civil service code over a statement made by the Education Secretary Bridget Phillipson in response to the ruling, which said “we have always supported the protection of single-sex spaces based on biological sex”.
The Tories claim this is false, because last summer Ms Phillipson herself gave an interview in which she suggested that trans women with penises could use female toilets.
Ms Phillipson has been approached for a response.
Her comments, however, are entirely in keeping with the government’s official statement on the judgement, which claims they have “always supported the protection of single-sex spaces based on biological sex” and welcomed the ruling as giving “clarity and confidence for women and service providers”.
The government statement added: “Single-sex spaces are protected in law and will always be protected by this government.”
The Bank for International Settlements’ (BIS) push to isolate crypto markets and its controversial recommendations on DeFi and stablecoins is “dangerous” for the entire financial system, warns the head of a blockchain investment firm.
“Many of their recommendations and conclusions — perhaps due to a mix of fear, arrogance, or ignorance — are completely uninformed and, frankly, dangerous,” CoinFund president Christopher Perkins said in an April 19 X post, referring to the BIS’ April 15 report titled “Cryptocurrencies and Decentralized Finance: Functions and Financial Stability Implications.”
BIS recommendations exposes TradFi to risks of “unimaginable scale”
“Crypto is not communism,” Perkins said, pushing back against the BIS’ call for a “containment” approach to isolate crypto from traditional finance and the broader economy.
“It’s the new internet that provides anyone with a connection access to financial services,” Perkins said. “You cannot control it anymore than you control the internet,” he added.
Perkins warned that a containment approach to crypto would expose the traditional financial system to massive liquidity risks “of unimaginable scale,” especially when the crypto market operates in real-time, 24/7, while traditional financial markets shuts down after trading hours.
“If implemented they will cause–not mitigate–the systemic risk they seek to prevent.”
The report warned that the number of investors and amount of capital in crypto and DeFi have “reached a critical mass,” with investor protection becoming a “significant concern for regulators.”
Perkins pushed back against the BIS’ claim that DeFi presents significant challenges, arguing instead that it represents a “significant improvement” over the “opacity” and imbalances of the traditional financial system.
Related: Crypto industry is not experiencing regulatory capture — Attorney
Responding to the BIS’s concern about the anonymity of DeFi developers, Perkins questioned its relevance:
“Sorry, but when was the last time a TradFi company published a list of its developers? Sure, public companies provide a degree of disclosures and transparency, but they seem to be dying off in favor of private markets.”
Perkins also critiqued the BIS’s concern around stablecoins that it could lead to “macroeconomic instability in countries like Venezuela and Zimbabwe.”
“If there is demand for USD stablecoins and it helps improve the condition of anyone in the developing world, perhaps that is a good thing,” Perkins said.
Perkins wasn’t alone in criticizing the controversial report. Lightspark co-founder Christian Catalini also weighed in, posting a series of critiques on X that same day. Catalini summed up the report with the analogy:
“Think: writing parking regulations for a fleet of self‑driving drones — earnest work, two technological leaps behind.”
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