Reeves gears up for fight to get economy growing again

David Maddox, The Independent

Rachel Reeves has been warned by business leaders that it is “crunch time” for her promises to deliver economic growth as she attempts to win back her credibility on the economy. In her first major speech since the Budget in October, the chancellor is hoping to signal how she can deliver the economic growth she promised during the election. It comes after a barage of criticism over her policies in the first seven months of government and speculation that Britain is on the brink of a recession. With business confidence rock bottom and chief executives privately claiming they were lied to at the election, Reeves and prime minister Sir Keir Starmer met many of the leaders of Britain’s biggest companies on Tuesday morning to heal relations.

Building on what was described as a successful business summit, Reeves will vow to go “further and faster” to kickstart the economy. Among the major projects she will unveil will be plans to deliver the Oxford-Cambridge Growth Corridor that will boost the UK economy by up to £78bn by 2035, according to industry experts. An announcement on the expansion of Heathrow is also expected despite the threat of a backlash by Labour MPs, while the chancellor will also back a major plan to redevelop the iconic Old Trafford home of Manchester United. But there is already confusion over how the policies will be delivered in government with Sir Keir telling businesses on Tuesday morning that anti-growth policies will be ditched.

However, later Downing Street clarified that growth will be one of the factors “hardwired” into considering policies.

Added to that, Reeves’ raising of national insurance on jobs has led to a recruitment freeze and pay rises being supressed. There has also been negative growth in two quarters, and the gilt markets underpinning national borrowing have hit higher levels than those seen after former prime minister Liz Truss’ disastrous mini-Budget.

Critics have wondered why she has persisted with “anti-growth” policies such as increasing workers’ rights and raiding family farms with inheritance tax changes.

The Lib Dems last night also questioned why Reeves and Sir Keir are unwilling to move their red lines on Brexit and consider rejoining the EU customs union and single market if growth is a priority. Lib Dem Treasury spokesperson Daisy Cooper MP said: “Trying to boost growth without fixing our trading relationship with Europe is like driving with the handbrake on. The government needs to put the national interest first and negotiate a new UK-EU customs union that would put rocket boosters under the economy.”

In her speech in Oxfordshire, the chancellor will tell regional and business leaders that economic growth is the number one mission of this government and its Plan for Change. She will declare that Britain’s economy has “huge potential” and is at the “forefront of some of the most exciting developments in the world like artificial intelligence and life sciences”.

She will review the Green Book — the government’s guidance on appraisal — in order to support decisions on public investment across the country, including outside London and the South East. The speech comes after Reeves last week announced a new approach for the National Wealth Fund (NWF) and the Office for Investment (OfI) to work with local leaders to build pipelines of incoming investment and projects linked to regional growth priorities. This includes the NWF trialling strategic partnerships in Greater Manchester, West Yorkshire, West Midlands, and Glasgow City Region and the OfI piloting an approach in the Liverpool City Region and the North East Combined Authority to connect their regions to central government and industry expertise in order to unlock private investment.

Reeves will say: “Low growth is not our destiny, but that economic growth will not come without a fight. Without a government that is on the side of working people. Willing to take the right decisions now to change our country’s course for the better.” The chancellor is expected to add: “Britain is a country of huge potential. A country of strong communities, with local businesses at their heart. We are at the forefront of some of the most exciting developments in the world like artificial intelligence and life sciences. We have great companies based here delivering jobs and investment in Britain.

“And we have fundamental strengths — in our history, our language, and our legal system — to compete in a global economy.” The announcements have so far been welcomed by business leaders. CBI chief executive Rain Newton-Smith said: “It’s crunch time for growth and today the chancellor has heeded business’s call to go further and faster. This is most evident in ministers grasping decisions that have sat on the desk of government for too long. This positive leadership and a clear vision to kickstart the economy and boost productivity is welcome.”

But Tory shadow chancellor Mel Stride warned: “The biggest barriers to growth in this country are Rachel Reeves, Keir Starmer, and their job-destroying Budget. “Hastily cobbled together announcements of growth in the 2030s will do nothing to help the businesses cutting jobs right now because of Labour’s punishing jobs tax, the companies being crushed under their barrage of new regulations, or the farmers facing bankruptcy over the cruel family farm tax. “Unfortunately for millions of people up and down the country much of the damage has already been done. Their Budget has killed growth stone dead, and that is even before their tax hikes start to bite in April.”