The Treasury has this morning hailed a diplomatic breakthrough, confirming that the Trump administration has abandoned a proposed $1.8 billion fund aimed at curbing the weaponisation of financial markets. Officials in Whitehall insist the move secures Britain’s defence sovereignty and protects the City’s ability to operate without overseas interference. Yet for those of us who watch the real economy, it is impossible to ignore the price of this “victory.”
Let us be clear about what has been stopped. The fund, championed by US Treasury Secretary Steven Mnuchin, was designed to penalise nations and entities that use financial tools as weapons – a response to Russia’s alleged meddling in elections and Iran’s use of sanctions loopholes. It would have given Washington unprecedented power to freeze assets and restrict transactions. For Britain, home to the world’s largest foreign exchange market and a hub for dollar-denominated trades, the threat was existential. The Treasury’s relief is understandable.
But this is a deal made in the smoke-free rooms of the establishment, far from the factory floors and high streets where I report. The Prime Minister hails it as a “victory for British values.” The Chancellor talks of protecting “our national interest.” I wonder: whose national interest? The interest of hedge fund managers in Mayfair or the steelworker in Rotherham? The defence of a financial system that has seen wages stagnate, zero-hours contracts proliferate, and inflation eat through the weekly shop like acid?
Union leaders are notably silent. The TUC has not yet commented, perhaps waiting for the fine print. But I spoke to Mick, a former miner turned union rep in Barnsley. “They tell us this is good for Britain,” he said, “but good for who? My members can’t get a pay rise, and the government is celebrating a financial deal. It feels like the world they protect is not the one we live in.”
And there is the rub. This “victory” solidifies the status quo – a system where capital moves freely but labour is tied to the floor. The City’s banks can continue their currency trades, but the manufacturing sector, the backbone of our northern towns, continues to decline. The pound is up this morning, but the price of petrol remains stubbornly high. The cost of living crisis does not care about defence sovereignty.
The irony is bitter. A fund designed to stop weaponisation of finance has been dropped, leaving the system open to the same old abuses. Meanwhile, the real weaponisation – of workers against bosses, of the North against the South, of those with savings against those with debt – goes unchallenged. The Treasury calls this a win. For the millions trying to make ends meet, it feels like one more defeat.
I will be watching the next set of figures on poverty and regional inequality. The defence of the realm is important. But so is the defence of the kitchen table. I suspect the government knows which one they truly fought for today.
