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?
Image: 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.
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13:27
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.”
Image: 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.
In common with many parents across the country, here’s a conversation that I have with my young daughter on a semi-regular basis (bear with me, this will take on some political relevance eventually).
Me: “So it’s 15 minutes until your bedtime, you can either have a little bit of TV or do a jigsaw, not both.”
Daughter: “Ummmm, I want to watch TV.”
Me: “That’s fine, but it’s bed after that, you can’t do a jigsaw as well.”
Fast-forward 15 minutes.
Me: “Right, TV off now please, bedtime.”
(Pause)
Daughter: “I want to do a jigsaw.”
Now replace me with the government, the TV and jigsaw options with axing welfare cuts and scrapping the two-child cap, and my daughter with rebellious backbenchers.
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6:36
Rachel Reeves’s fiscal dilemma
That is the tension currently present between Downing Street and Labour MPs. And my initial ultimatum is the messaging being pumped out from the government this weekend.
In essence: you’ve had your welfare U-turn, so there’s no money left for the two-child cap to go as well.
As an aside – and before my inbox fills with angry emails lambasting me for using such a crude metaphor for policies that fundamentally alter the lives of some of the most vulnerable in society – yes, I hear you, and that’s part of my point.
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9:11
Welfare U-turn ‘has come at cost’
For many in Labour, this approach feels like the lives of their constituents are being used in a childish game of horse-trading.
So what can be done?
Well, the government could change the rules.
Altering the fiscal rules is – and will likely remain – an extremely unlikely solution. But as it happens, one of Labour’s proverbial grandparents has just popped round with a different suggestion.
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5:31
Welfare: ‘Didn’t get process right’ – PM
A wealth tax, Lord Neil Kinnock says, is the necessary outcome of the economic restrictions the party has placed on itself.
Ever the Labour storyteller, Lord Kinnock believes this would allow the government to craft a more compelling narrative about whose side this administration is on.
That could be valuable, given one of the big gripes from many backbench critics is that they still don’t really understand what this prime minister stands for – and by extension, what all these “difficult decisions” are in aid of.
The downside is whether it will actually raise much money.
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16:02
Is Corbyn an existential risk to Labour?
The super-rich may have lots of assets to take a slice from, but they also have expensive lawyers ready to find novel ways to keep their client’s cash away from the prying eyes of the state.
Or, of course, they could just leave – as many are doing already.
In the short term, the future is a bit easier to predict.
If Downing Street is indeed now saying there is no money to scrap the two-child cap (after heavy briefing in the opposite direction just weeks ago), an almighty tantrum from the backbenches is inevitable.
And as every parent knows, the more you give in, the harder it becomes to hold the line.
The UK has re-established diplomatic ties with Syria, David Lammy has said, as he made the first visit to the country by a British minister for 14 years.
The foreign secretary visited Damascus and met with interim president Ahmed al Sharaa, also the leader of the rebel group Hayat Tahrir al-Sham (HTS), and foreign minister Asaad al Shaibani.
In a statement, Mr Lammy said a “stable Syria is in the UK’s interests” and added: “I’ve seen first-hand the remarkable progress Syrians have made in rebuilding their lives and their country.
“After over a decade of conflict, there is renewed hope for the Syrian people.
“The UK is re-establishing diplomatic relations because it is in our interests to support the new government to deliver their commitment to build a stable, more secure and prosperous future for all Syrians.”
Image: Foreign Secretary David Lammy with Syria’s interim president Ahmed al Sharaa in Damascus. Pic: X / @DavidLammy
The Foreign, Commonwealth and Development Office has also announced a £94.5m support package for urgent humanitarian aid and to support the country’s long-term recovery, after a number of British sanctions against the country were lifted in April.
While HTS is still classified as a proscribed terror group, Sir Keir Starmer said last year that it could be removed from the list.
The Syrian president’s office also said on Saturday that the president and Mr Lammy discussed co-operation, as well as the latest developments in the Middle East.
Since Assad fled Syria in December, a transitional government headed by Mr al Sharaa was announced in March and a number of western countries have restored ties.
In May, US President Donald Trump said the United States would lift long-standing sanctions on Syria and normalise relations during a speech at the US-Saudi investment conference.
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1:12
From May: Trump says US will end sanctions for Syria
He said he wanted to give the country “a chance at peace” and added: “There is a new government that will hopefully succeed.
“I say good luck, Syria. Show us something special.”
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