Britain's cost of living squeeze eases; IMF blasts Trump's trade tariffs - as it happened

Time for a quick recap.

Britain’s workers have received their first inflation-beating pay rise in a year. Wages rose by 2.8% per year in the three months to February, meaning they narrowly overtook inflation.

In a solid set of data, the UK unemployment rate hit a new 42-year low of 4.2% and the employment rate climbed to a record high.

But.... workers are still around £800 per year poorer than before the financial crisis, and real wage growth is likely to remain modest this year.

Economists have also predicted that rising wages make a UK interest rate rise next month more likely.

This helped to push the pound up to a new 22-month high this morning. Although it has dipped since, it is close to its highest point since June 2016 (before the EU referendum).

The International Monetary Fund has sounded the alarm over rising protectionism in the global economy.

In its latest World Economic Outlook, the IMF also predicted that global growth will be solid this year and next, but it also sees a slowdown further ahead.

World stock markets have gained ground today, thanks to strong financial results from Netflix and Goldman Sachs - and the absence of fresh geopolitical tensions.

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That’s probably all for today...

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The IMF’s warning about trade wars hasn’t spooked the financial markets.

Over in New York, the Dow Jones industrial average has gained 209 points, or 0.85%, to 24,782.

The S&P 500 and the Nasdaq indices are also enjoying gains, as investors shrug off the Fund’s worries about looming problems in the global economy.

Instead, Wall Street has been cheered by forecast-beating results from Netflix last night, and both Goldman Sachs and Johnson & Johnson today.

Why do the IMF’s long-term forecasts suggest Britain might outperform some EU members, despite Brexit?

Maurice Obsfeld says the Fund is using a rather optimistic model for Brexit, in which no new tariffs are imposed between the UK and the European Union and there is broad equivalency between the two sides.

This best-case scenario assumes that both sides aim for an agreement n their own interests.

So, “if all goes well...things do not look so bad” for the UK economy, Obsfeld said. But, there will still be losses compared to staying in the EU, he adds.

Chris Giles of the FT points out that the IMF’s World Economic Outlook is rather more positive than Maurice Obstfeld’s gloomy statement today. Is that because recent economic data, and spiralling trade tensions, mean the report is already out of date?

Obstfeld agrees that some “high frequency data” that suggests slowing economic growth has been released in recent weeks, since the report was completed. That includes various Purchasing Managers Index (PMI) reports, which have fallen back from recent highs.

The IMF is taking questions on its World Economic Outlook now.

Our economics editor Larry Elliott asks the Fund what it wants creditor nations (such as Germany and China) to do to help tackle trade imbalances.

Maurice Obstfeld replies that Germany has the ability to spend more on infrastructure, and also boost private investment - measures that would close its trade surplus.

On the other side of the coin, America should be more concerned about the sustainability of its public finances (the annual budget deficit could hit a staggering $1 trillion in 2020).

Some reaction to the IMF’s report:

The IMF has upgraded its forecast for UK growth by 0.1% this year to 1.6%, from 1.5% last October.

But growth in 2019 has been lowered by 0.1% to 1.5%.

That would see Britain lag behind the eurozone, which is expected to grow by 2.4% this year and 2% in 2019.

The IMF has also warned America against triggering a trade war with China.

In an unusually forthright comment, Maurice Obstfeld said the recent tariffs pushed through by Donald Trump will push America deeper into the red:

He says:

“These initiatives will do little… to change the multilateral or overall US external current account deficit, which owes primarily to a level of aggregate US spending that continues to exceed total income.

“Recent US fiscal measures will actually widen the US current account deficit.

NEWSFLASH: The International Monetary Fund has warned that the world’s trade system is in peril, as the showdown between America and China over tariffs threatens to boil over.

The warning comes in the IMF’s latest assessment of the global economy, which is being released in Washington now.

Maurice Obstfeld, the IMF’s economic counsellor, singled out the dangers of protectionism, saying:

The first shots in a potential trade war have now been fired.”

“The multilateral rules-based trade system that evolved after world war two and that nurtured unprecedented growth in the world economy needs strengthening. Instead, it is in danger of being torn apart.”

Obstfeld also took aim at populism, saying:

“The renewed popularity of nationalistic policies is another after-effect of the financial crisis and its prolonged aftermath.”

But despite these concerns, the IMF expects the global economy to grow by 3.9% in 2018 and 2019 -- 0.2 percentage points higher than six months ago.

Here’s our news story on today’s labour market figures: