It’s already below freezing in the Swiss Alps, but Chancellor of the Exchequer Rachel Reeves is seeking to dial down the temperature.
With US President Donald Trump about to descend on Davos for the first time since 2020 amid a maelstrom of recriminations over his tariff threats, she urged people “to keep cool heads.” 
Speaking at Bloomberg House in Davos, where she’s attending this year’s World Economic Forum, she said after the US president’s fired off his latest salvos against allies: “all of our focus is on de-escalation, not on worst-case scenarios.”
Though she’s shown up to urge the financial elite to boost investment in Britain, her message has been overshadowed by Trump’s threat of fresh barriers on British goods. She described the UK’s growth as resting on a platform of trade and stability, underscoring what the ructions emanating from the White House put at risk.  
Although Reeves described the relationship between the two allies in almost Trumpian terms of excess — saying the strategic relationship between Britain and the US was “more important than the partnership between any two countries in the world” — it has hit a bit of a rough patch in recent days. 
On Tuesday morning the US president signaled fresh opposition to Prime Minister Keir Starmer’s plans to transfer sovereignty of an Indian Ocean island that houses a key US-UK base to Mauritius, calling it an act of “total weakness.” 
That came less than 24 hours after Starmer convened an “emergency” press conference at which he said the US president was “completely wrong” to threaten allies for defending Greenland against his ambitions to take it over
Relations with the US are still “very good,” Reeves said. 
Those tensions arrive as Reeves and Starmer are trying to deliver on their struggling pledge to have the highest economic growth in the Group of Seven. Reeves is also trying to win over executives at Davos against the backdrop of having raised taxes by almost £60 billion ($81 billion) over the past two years, in large part from employers and the wealthy. 
Questioned on whether new US tariffs on the UK might force her to react with tax hikes, Reeves said she’d built up a stronger fiscal buffer against uncertainties at her last budget, and that she didn’t expect to have to do so.
“We will not need to do more on that front,” she said. “We don’t plan any tax changes in the spring, and very much hope after the headroom that we have built in through difficult decisions on tax and spending, that that provides the stability that we need.”
Reeves visits the Swiss mountains while her Labour government lags Nigel Farage’s Reform UK in the polls and Starmer himself faces persistent speculation about a potential internal challenge to his leadership. Reeves who, like Britain’s premier, has also seen record-low approval ratings, dismissed the prospect of Starmer’s ouster.
“I really don’t think people need to worry about that,” she said. “Even if someone did have the stupid idea of challenging the prime minister, it is incredibly difficult to do so.”
The rise of Reform has raised expectations that Farage could be the UK’s next prime minister after the next general election, which is due by 2029. Reeves warned about the consequences of a Reform government, saying Farage would be “very bad news” for the British economy and urged businesses not to “sit on the sidelines”.

In a wide-ranging interview, Reeves also:
Said the UK doesn’t need to join a customs union with the EU to enjoy better trading terms with the bloc
Said she is seeking to deepen economic ties with China
Outlined plans to intensify efforts to attract global talent to Britain in sectors such as artificial intelligence, life sciences and clean energy
Lambasted former members of the opposition Conservative Party who have recently defected to Reform: “Robert Jenrick, Andrew Rosindell and the other people whose names no one remembers lost the support of the British public a year ago. They’re now changing their rosettes and thinking that that will change their fortunes. It won’t.”
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