Today, Chancellor Rachel Reeves delivered a highly anticipated speech at a Siemens factory in Oxfordshire, outlining her economic vision for the UK. Speaking to an audience of business leaders, she set out a bold vision for growth, promising to remove barriers to investment and infrastructure development in the UK.
Her plan, focused on supply-side reforms, aims to tackle what she calls “chronic underinvestment”, which economists have long blamed for the country’s sluggish growth since the 2008 financial crisis.
Key proposals include streamlining planning regulations, accelerating major infrastructure projects, and unlocking pension fund surpluses to support long-term investment.
However, with immediate economic headwinds—including job losses at Tesco, Lloyds, and Sainsbury’s—and ongoing uncertainty in the global economy, the viability of Reeves’s strategy remains uncertain.
Infrastructure at the Forefront: Heathrow and Oxford-Cambridge Corridor
One of the most contentious aspects of Reeves’s plan is her endorsement of a third runway at Heathrow Airport, a project first approved by Parliament in 2018 but delayed due to legal challenges and the COVID-19 pandemic.
Reeves argues that the expansion will boost economic growth and create thousands of jobs, but critics—including London Mayor Sadiq Khan and environmental groups—warn it will increase pollution and make it harder for the UK to meet its net-zero targets.
Beyond Heathrow, Reeves is championing the Oxford-Cambridge growth corridor, which she hopes will become “Europe’s Silicon Valley.” The plan includes transport improvements, such as reopening the Oxford-Cambridge rail line, and fostering investment in science and technology hubs.
However, the project’s success depends on overcoming local opposition to new developments, particularly in semi-rural areas where expansion is unpopular.
Regulatory Overhaul and Investment Incentives
A major pillar of Reeves’s plan is reducing red tape to speed up construction and infrastructure projects. She has announced a new planning and infrastructure bill, set to be introduced in the spring, that will limit environmental objections to new developments and make it easier to build homes around transport hubs.
Reeves also plans to unlock pension fund surpluses for pro-growth investment by easing regulatory restrictions. While this could provide a new source of capital for infrastructure projects, Paul Johnson, director of the Institute for Fiscal Studies (IFS), cautions that the long-term benefits are uncertain and may not provide the immediate boost the UK economy needs.
Short-Term Economic Headwinds
Despite Reeves’s long-term vision, immediate economic concerns are mounting. Within 24 hours of her speech:
- Tesco announced 400 job cuts
- Lloyds confirmed the closure of 136 branches
- Durham and Cardiff Universities collectively cut 600 jobs
- Sainsbury’s cut 3,000 jobs the previous week
Meanwhile, Durham and Cardiff universities have collectively cut 600 jobs, moves attributed in part to higher National Insurance contributions and expanded workers’ rights.
The job losses highlight the short-term fragility of the UK economy, with businesses responding to rising costs and regulatory changes. Critics, including opposition MPs and industry leaders, argue that Reeves’s strategy lacks a near-term stimulus to counteract these challenges.
Adding to the economic uncertainty, Bank of England Governor Andrew Bailey warned that major fiscal decisions will be needed to prevent the UK’s public debt from spiraling further. Reeves, acknowledging the challenge, told ITV: “I’m trying to turn around this economy. It’s not an easy job.”
Brexit and International Investment Sentiment
Although Reeves did not mention Brexit directly in her speech, she highlighted the EU as the UK’s largest trading partner and suggested that smoother relations would be in the “national interest.”
This aligns with speculation that Labour may consider joining the Pan-Euro-Mediterranean convention (PEM) to reduce post-Brexit trade barriers. However, the government has no plans to rejoin the customs union or single market, which some analysts argue continues to limit UK export competitiveness.
Meanwhile, a PwC survey of global CEOs found that the UK is currently the second most attractive destination for foreign investment, behind only the US. This suggests that despite ongoing political and economic challenges, investors still see the UK as an appealing market.
Can the UK’s Workforce Support Reeves’s Ambitions?
Reeves’s government has pledged to build 1.5 million homes while expanding airports, transport hubs, and commercial districts. However, a severe construction workforce shortage could stymie these efforts.
With Labour committed to reducing migration and no plans to restore free movement with the EU, questions remain about whether the UK has the necessary labour supply and skills base to deliver on these ambitious projects.
Can Reeves Deliver on Her Plan?
There is no quick-fix lever that can drive immediate economic growth, but Reeves’s plan is arguably the most structured economic strategy seen in recent years. The focus on cutting red tape, fast-tracking investment, and boosting infrastructure aligns with pro-business policies that many analysts believe are overdue.
The plan’s success, however, will depend on execution and overcoming significant obstacles. Key challenges include:
- Immediate economic struggles, including job losses and rising costs for businesses
- Political resistance to deregulation and large-scale infrastructure projects
- Global economic risks, particularly Trump’s protectionist trade policies, which could impact UK exports
- Workforce shortages, particularly in construction and infrastructure sectors
The IFS has described the government’s plans as “sensible” but warns that their success is not guaranteed. Heathrow expansion, for example, has faced multiple delays, and its alignment with net-zero targets remains unclear.
As Boris Johnson once said, “plan beats no plan.” Reeves has put forward a plan—now, remains to be seen whether it will genuinely turbocharge UK growth or become another stop-start economic strategy.