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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 if Donald Trump could win the 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
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 Trump’s tariffs.

That includes 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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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 holds a press briefing on the Global Policy Agenda to open the IMF and World Bank's 2024 annual Spring Meetings in Washington, U.S., April 18, 2024. REUTERS/Kevin Lamarque
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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.

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Tide turns as TPG leads talks to lead digital bank fundraising

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Tide turns as TPG leads talks to lead digital bank fundraising

TPG, the American private equity giant, is in advanced talks to take a stake in Tide, the British-based digital banking services platform.

Sky News has learnt that TPG, which manages more than $250bn in assets, is discussing acquiring a significant shareholding in the company.

Sources said that Tide’s existing investors were expected to sell shares to TPG, while a separate deal would involve another existing shareholder in the company acquiring newly issued shares.

The two transactions may be conducted at different valuations, although both are likely to see the company valued at at least $1bn, the sources added.

The size of TPG’s prospective stake in Tide was unclear on Monday.

Earlier this year, Sky News reported that Tide had been negotiating the terms of an investment from Apis Partners, a prolific investor in the fintech sector, although it was unclear whether this would now proceed.

Tide has roughly 650,000 SME customers in both Britain and India, with the latter market expanding at a faster rate.

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Morgan Stanley, the Wall Street bank, has been advising Tide on its fundraising.

Tide was founded in 2015 by George Bevis and Errol Damelin, before launching two years later.

It describes itself as the leading business financial platform in the UK, offering business accounts and related banking services.

The company also provides its SME ‘members’ in the UK a set of connected administrative solutions from invoicing to accounting.

It now boasts a roughly 11% SME banking market share in Britain.

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Tide, which employs about 2,000 people, also launched in Germany last May.

The company’s investors include Apax Partners, Augmentum Fintech and LocalGlobe.

Chaired by the City grandee Sir Donald Brydon, Tide declined to comment on Monday.

TPG also declined to comment.

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Trump trade war could still see America come off worse

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Trump trade war could still see America come off worse

It is a trade deal that will “rebalance, but enable trade on both sides,” said Ursula von der Leyen after the EU and US struck a trade deal in Scotland.

It was not the most emphatic declaration by the president of the European Commission.

The trading partnership between two of the biggest markets in the world is in significantly worse shape than it was before Donald Trump was elected, but this deal is better than nothing.

As part of the agreement, European exports to the US will be hit with a 15% tariff. That’s better than the 30% the bloc was threatened with but it is a world away from the type of open and free trade European leaders would like. The EU had offered tariff free trade to the US just weeks before the deal was announced.

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Instead, it has accepted a 15% tariff and agreed to ramp up its energy purchases from the US.

The EU tariff on US imports will remain close to zero but Europe did get some important exemptions – on aviation, critical raw materials, some chemicals and some medical equipment. That being said, the bloc did not achieve a breakthrough on steel, aluminium or copper, which are still facing a 50% tariff. It means the average tariff on EU exports to the US will now rise from 1.2 % last year to 17%.

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There is also confusion over the status of pharmaceuticals – an important industry to Europe. Products like Ozempic, which is made in Denmark, have flooded into the US market in recent years and Donald Trump was threatening tariffs as high as 50% on the sector.

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US and EU agree trade deal

It appears that pharmaceuticals will fall under the 15% bracket, even though President Trump contradicted official announcements by suggesting a deal had not yet been made on the industry. The risk is that the implementation of the deal could be beset with differences of interpretation, as has been the case with the Japan deal that Trump struck last week.

It also risks fracturing solidarity between EU states, all of which have different strategic industries that rely on the US to differing degrees. Germany’s BDI federation of industrial groups said: “Even a 15% tariff rate will have immense negative effects on export-oriented German industry.”

The VCI chemical trade association said rates were still “too high”. For German carmakers, including Mercedes and BMW, there was some reprieve from the crippling 27.5% tariff imposed by Trump. The industry is Europe’s top exporter to the US but the German trade body, the VDA, warned that a 15% rate would “cost the German automotive industry billions annually”.

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Who’s the winner in the US-EU trade deal?

Meanwhile, François Bayrou, the French Prime Minister, described the agreement as a “dark day” for the union, “when an alliance of free peoples, gathered to affirm their values and defend their interests, resolves to submission.”

While the deal has divided the bloc, the greater certainty it delivers is not to be snubbed at.

Markets bounced on the news, even though the deal will ultimately harm economic growth.

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‘Millions’ of EU jobs were in firing line

Analysts at Oxford Economics said: “We don’t plan material changes to our eurozone baseline forecast of 1.1% GDP growth this year and 0.8% in 2026 in response to the EU-US trade deal.

“While the effective tariff rate will end up at around 15%, a few percentage points higher than in our baseline, lower uncertainty and no EU retaliation are partial offsets.”

However, economists at Capital Economics said the economic outlook had now deteriorated, with growth in the bloc likely to drop by 0.2%. Germany and Ireland could be the hardest hit.

While the US appears to be the obvious winner in this negotiation, uncertainty still hangs over the US economy.

Trump has not achieved his goal of “90 deals in 90 days” and, in the end, American consumers could still bear the cost through higher prices.

That of course depends on how businesses share the burden of those higher costs, with the latest data suggesting that inflation is yet to rip through the US economy. While Europe determined on Sunday that a bad deal is better than no deal, some fear that the worst is yet to come for the Americans.

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US and EU agree trade deal, says Donald Trump

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US and EU agree trade deal, says Donald Trump

The United States and European Union have agreed a trade deal, says Donald Trump.

The announcement was made as the US president met European Commission chief Ursula von der Leyen at one of his golf resorts in Scotland.

Speaking after talks in Turnberry, Mr Trump said the EU deal was the “biggest deal ever made” and it will be “great for cars”.

The US will impose 15% tariffs on EU goods into America, after Mr Trump had threatened a 30% levy.

He said there will be an EU investment of $600bn in the US, the bloc will buy $750bn in US energy and will also purchase US military equipment.

Mr Trump had earlier said the main sticking point was “fairness”, citing barriers to US exports of cars and agriculture.

He went into the talks demanding fairer trade with the 27-member EU and threatening steep tariffs to achieve that, while insisting the US will not go below 15% import taxes.

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For months, Mr Trump has threatened most of the world with large tariffs in the hope of shrinking major US trade deficits with many key trading partners, including the EU.

Ms von der Leyen said the agreement would include 15% tariffs across the board, saying it would help rebalance trade between the two large trading partners.

In case there was no deal and the US had imposed 30% tariffs from 1 August, the EU has prepared counter-tariffs on €93bn (£81bn) of US goods.

Ahead of their meeting on Sunday, Ms von der Leyen described Mr Trump as a “tough negotiator and dealmaker”.

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