Reeves to hold talks with US counterpart after hitting out at Trump’s ‘folly’ over Iran war
Rachel Reeves is set to meet her US counterpart after he argued “a small bit of economic pain” caused by the Iran war was worth it to prevent Tehran getting a nuclear weapon.
The comments by US treasury secretary Scott Bessent put him at odds with the chancellor, who has gone public with her anger and frustration at the “folly” of America’s actions in the Middle East and its financial fallout on families.
The pair were due to hold face-to-face talks in Washington DC on Wednesday during the spring meetings of the International Monetary Fund (IMF), which will be dominated by the ongoing crisis in the Gulf, which has inflicted a global economic shock and sent energy prices soaring.
Prior to the chancellor heading stateside, the influential financial body slashed Britain’s economic growth forecast as a result of the conflict and warned a worldwide recession could be a “close call” in a severe scenario.
The IMF said the international outlook had “abruptly darkened” as a result of the war, which threatens to throw the global economy “off course” and could cause an energy crisis on an unprecedented scale.
Of the major economies, the UK faces the biggest hit to growth, the IMF said, with forecasts slashed for the next two years. In a further blow to Sir Keir Starmer, the IMF also warned that inflation and unemployment will rise.
However, despite the “large” jolt to the global economy, Bank of England governor Andrew Bailey insisted the UK was much better placed to deal with it because of its resilient banking system, forged in the wake of the 2007-2009 financial crisis.
Meanwhile, President Donald Trump has said a second round of talks between the US and Iran could happen “over the next two days”, after negotiations at the weekend collapsed.
In an interview which is due to be broadcast on Wednesday, Mr Trump told the Fox Business Network he viewed the conflict as nearing completion and said Iran was keen to make a deal.
“If I pulled up stakes right now, it would take them 20 years to rebuild that country,” he said. “And we’re not finished. We’ll see what happens. I think they want to make a deal very badly.”
Tehran’s nuclear ambitions were a key sticking point.
Diplomats have been working behind the scenes as the US imposed its blockade of Iranian ports and Tehran threatened retaliatory strikes across the region, amid a shaky ceasefire.
At the same time, Sir Keir Starmer is seeking to coordinate international efforts to ensure the strategic Strait of Hormuz can remain open to shipping after hostilities end.
The critical waterway, used to move one fifth of the world’s oil and gas supplies, has become a major flashpoint in the conflict, with its effective closure by Iran hiking the cost of fuel, food and other basic goods.
