
A promise to go further and faster A look at the Chancellor's speech on 29 January
The Chancellor’s latest speech is to be cautiously welcomed – though much still depends on the government’s capacity to deliver its pledges.
The Chancellor, Rachel Reeves, was in bullish form as she delivered a major speech in Oxfordshire on Wednesday.
In front of an invited audience of industry leaders (including the IoD) and media, Reeves said that the government has increased infrastructure spending to 2.6% of GDP, up from 1.9% under the Conservatives.
And she offered a reminder that the IMF has upgraded its UK growth forecast for 2025 to 1.6% – versus 0.8% for France and just 0.3% for Germany.
“Low growth is not our destiny,” said Reeves. “Britain is a country of huge potential.”
Peppered with policy announcements, the speech marked an attempt at something like a fresh start in the Chancellor’s relationship with business. She succeeded in communicating a more positive narrative than has been heard of late – which may contribute to a gradual rebuilding of business confidence.
Certainly, the green light for Heathrow expansion is a major signal of the government’s intentions. Could this government have the political capital needed to prevail where others stalled? With backing already given to expansion elsewhere, there is a clear determination to expand the UK’s airport capacity – something the IoD supports.
Elsewhere, there was a promise to go “further and faster to unlock the potential of the Oxford-Cambridge Growth Corridor,” support for reopening Doncaster Sheffield Airport, and a partnership to build an advanced manufacturing and logistics park around Manchester Airport. Reviewing government guidance on major projects to ensure that investment flows across the UK, not just to London and the South East, is welcome.
Much will now depend on the ability of government to deliver, particularly in terms of enacting meaningful planning and infrastructure reform across all regions and nations of the UK.
There were also areas where the Chancellor might have said more.
On trade, Reeves discussed her recent trip to China, and a forthcoming visit by the Business and Trade Secretary to India – yet said nothing about the UK’s biggest trading partner, the EU. It was left to the Paymaster General, Nick Thomas-Symonds MP, to reassert during subsequent media interviews the government’s plans for improving EU trading arrangements. This should be a priority.
Perhaps most significantly, there was no movement on Labour’s employment rights package, which risks having a detrimental impact on job creation. Hopes the government might move to address business’s concerns, or phase measures in over time, went unfulfilled.
So it is a cautious welcome, then, for this week’s speech. The Chancellor has set the right tone with her rigorous focus on enabling growth. If this is reflected in a shift to pro-growth decision-making across government departments and regulatory bodies, both at national and local level, it could help shift the dial in terms of the willingness of business to invest.
