Reeves seeks US trade deal to boost growth but chlorinated chicken ban to stay

ITV News Business and Economics Editor Joel Hills spoke to Chancellor Rachel Reeves about the increasing challenge of boosting the UK’s economic growth
Economic growth in the United Kingdom has slowed to almost a standstill in the three months after Labour swept to power.
The economy grew by just 0.1% between July and September – a snail’s pace. In September, it went into reverse.
The National Institute for Economic and Social Research says “pre-Budget uncertainty” helps to explain the stall.
The Confederation of British Industry, which represents 190,000 businesses, agrees.
In September, both the chancellor and prime minister were accused of being too pessimistic about the UK’s prospects, as they tried to prepare households and businesses for the tax and spending decisions that were to come.
“Am I satisfied with the numbers published today? Of course not,” Rachel Reeves said this morning. But neither does she feel responsible.
“I was really honest when I became Chancellor about the scale of the challenges that I inherited, particularly the situation with the public finances,” she told ITV News.
“We had to make a number of difficult decisions on spending, welfare and taxation, but those decisions have now been taken. We’ve wiped the slate clean after 14 years of chaos.”
Reeves says economic growth still “remains the number one mission” for the Labour government
What happens next to the economy depends to some extent on how businesses react to the additional costs the chancellor saddled them with in her Budget.
The Office for Budget Responsibility assumes lower wage growth is the most likely outcome, but the business reaction to Reeve’s decisions to hike national insurance for employers from next April has been pretty sour.
No one likes paying more tax but some firms talk of cutting investment and freezing recruitment, leaving the likes of M&S, Sainsbury’s, Wetherspoons and JD Sports all saying prices will rise.
It’s possible there will be consequences the chancellor didn’t intend. But it’s too soon to judge.
There are good reasons to broadly hope that growth will pick up in the short term.
Government investment should boost activity. Inflation is low, interest rates have edged down – today’s ONS release suggests consumers are already feeling the benefits and spending more.
The government has promised to serve up the fastest sustained growth in the G7.
On the performance of the last twelve months, the UK is currently in the middle of the pack.
The front-runner, and by a country mile, is the US economy which continues to leave others trailing.
Last night, in her Mansion House speech, Reeves announced a series of reforms for pensions and the way financial services are regulated – which are designed to lift growth.
But the benefits will not be felt in this parliament, not because they are not good ideas but because they will only deliver in the long run.
To make a meaningful difference in the next five years, the chancellor needs to do something else.
This morning, Reeves says she is hoping to secure a free-trade deal with the United States.
“There’s more than £300 billion of trade flows between the UK and the United States every year, and we want to see that trade increase,” she said.
A trade agreement with Donald Trump would be quite a coup but negotiations with him in his first term collapsed because the British government refused to reduce restrictions on agricultural imports.
In opposition, Labour supported the ban on US chlorinated chicken and hormone-fed beef. The chancellor says this position “won’t change.”
As for Trump, his goal appears to be to reduce what America imports rather than getting better access to foreign markets.
If he does what he has previously said, Trump will impose a universal tax on all US imports of 10-20%.
The chancellor says tariffs of the sort Trump proposes would “push up prices for consumers in Britain and the United States”.
Would the UK retaliate with tariffs of its own? The chancellor won’t say but insists “we’re not passive in these negotiations”.
There are other levers the chancellor could pull.
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The Governor of the Bank of England, Andrew Bailey suggests closer trade links with Europe would lift growth and it looks like that will be the next instalment of the chancellor’s plan.
Reeves speaks of “resetting” the relationship and not rejoining the European Union.
It’s not clear what this means or how ambitious she plans to be.
Labour’s manifesto pledged to “negotiate a veterinary agreement” to avoid the need for checks at the border but we don’t know what the government is willing to offer the EU in return.
The potential is there but progress seems slow. As things stand, we probably shouldn’t expect miracles.
In opposition, Labour supported the ban on US chlorinated chicken and hormone-fed beef. The chancellor says this position “won’t change.”
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