UK’s Reeves Bonds With Yellen in Debut on Global Finance Stage

(Bloomberg) -- Rachel Reeves’s choice of dinner partner after her first day of international economic diplomacy as Britain’s new chancellor was perhaps unsurprising: US Treasury Secretary Janet Yellen, a woman she has long admired.

After the first all-female meeting between finance ministers of the UK and US, which took place on Thursday at a G-20 session in Rio de Janeiro, the pair had a private social gathering in the evening and struck up a strong rapport, according to two people familiar with the matter. 

Reeves was making her first trip abroad since becoming chancellor after her Labour Party won a landslide election victory earlier this month. She credits Yellen as an influence and has described Labour’s economic strategy — of building up domestic industry through a more interventionist state that crowds in private investment — as being in the same vein as Bidenomics.

Reeves also had one-on-one meetings with IMF Managing Director Kristalina Georgieva, Italy’s finance minister Giancarlo Giorgetti, Brazil’s Fernando Haddad and Canada’s finance chief Chrystia Freeland. Reeves made a point of highlighting the importance of female leadership on the trip, and was pictured with Georgieva, Freeland, Yellen and Indonesia’s Sri Mulyani Indrawati.

“I want to use this platform to work with women leaders in economics and finance to champion the role of women in the economy,” she said at the start of her talks with Yellen.

Another official said Reeves, a former economist at the Bank of England, impressed with her command of the facts. A third official said Reeves gave the air of still being in election campaigning mode, and put a heavy emphasis on boosting prosperity and the importance of spurring economic growth. The officials requested anonymity to discuss private conversations.

Reeves was helped at the summit by the lack of major flashpoints or sources of diplomatic tension. There was common ground on continuing to fight climate change and support Ukraine against Russia’s invasion, and finance chiefs punted on a decision about whether to introduce a global tax on billionaires.

The issue of domestic taxation is one of the tougher tests that lie in wait for Reeves when she returns to the UK. She is due to update Parliament on Monday about a near £20 billion ($26 billion) shortfall in the public finances, a moment that could set the tone for UK politics and economics for the next five years. The funding gap raises the prospect of Reeves having to hike taxes at her budget in the autumn. 

“We have inherited a mess, but I am going to fix the mess that the Tories have left us,” Reeves said on the sidelines of the summit. “I’ve always been honest that the challenge confronting this new government is immense.”

--With assistance from Martha Beck and Laura Dhillon Kane.

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