UK finance minister says UK ‘is not part of the problem’ when it comes to US trade

UK Finance Minister Rachel Reeves speaks on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland, on January 22, 2025.

Gerry Miller | CNBC

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 that there are large and ongoing changes in the trade balance with the U.S.,” U.K. Chancellor of the Exchequer Rachel Reeves told CNBC’s Andrew Ross Sorkin. A surplus country, but that’s 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 was last in office,” she told CNBC in an interview. world economic forum In Davos, Switzerland.

UK Finance Minister Rachel Reeves: UK 'not part of the problem' when it comes to US trade

President Trump is very annoyed by the trade deficits the United States has with many of its partners, But trade with Britain is generally more balancedIn 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). However, in the second quarter of 2023, the UK’s goods trade deficit with the United States was £2.3 billion.

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 achieve economic growth, 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 unveiling Treasury spending and tax plans last fall.

package of measures Presented in the Autumn Budget The bill focuses on increasing the tax burden on British businesses and has drawn widespread criticism from industry leaders, who say the move will stifle investment, jobs and growth.

Recently released data, including Growth 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, though, is that in the budget I set out in October, I set out the fiscal rules by which this government will operate. Those fiscal rules are to pay for day-to-day spending through tax revenues and to reduce our debt as a share of GDP — —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 a number of ministers including Foreign Affairs Minister David Lamy having made 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 Elon Musk, a close ally of Trump, and the tech billionaire has criticized Prime Minister Starmer and the British Prime Minister. 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”.