Reeves will go ‘faster and faster’ for growth after recent turmoil

A flurry of UK economic data in the UK this month has given Chancellor Rachel Reeves “permission” to pursue a more aggressive growth agenda, according to senior government officials, trampling on Labor sensitivities and putting her on a war footing. with regulators.

The chancellor will deliver a “growth” speech next week against the backdrop of a stagnating economy, recent turmoil in bond markets and a survey on Friday showing UK firms cutting jobs at the fastest pace since the financial accident, except the pandemic.

Reeves, who wants to accelerate a series of flagship investment projects, colleagues who decided after their recent blow at the hands of markets and political opponents to go “faster and further” to continue growth.

“There is a view at the Treasury that this is all fine,” one minister said. “It is seen as permission for them to get tougher on growth measures.”

An ally of the chancellor said: “She has been frustrated by the speed at which things have been happening. She wants to use the power of the Treasury to show where we want to go next. This is a politically contentious thing.”

For example, Reeves, who attracted conservative criticism for visiting Beijing this month, is pushing for fast fashion company Shein to list in London, despite concerns about standards at its factories in China. He also supports an expansion of Heathrow airport.

Market turmoil at the start of the year led to claims that Reeves’ job was on the line, but his supporters say he has used the episode to respond with “strength and decisiveness.” She said this month that she would be happy to be known as “The Iron Chancellor”.

Conservatives, however, say this is ridiculous. “It is clear that Labor is out of its depth and out of ideas to grow the economy,” said Shadow Business Secretary Andrew Griffith. “Workers are paying the price for Labour’s war on business.”

Griffith points out that for all Reeves’ deregulatory talk, he is about to impose a raft of new labor laws on companies, which the government estimates will cost businesses £5bn.

But Reeves, who was speaking about the British economy at the World Economic Forum this week, has demonstrated in recent days a willingness to use the power of his office to take decisive action in Whitehall, some of which is privately applauded by voters. conservatives.

This week, ministers ousted Marcus Bokkerink as chairman of the Competition and Markets Authority, the monopoly regulator that has been criticized for allegedly lagging growth.

His departure was a signal to other regulators that they must push growth harder, according to Treasury officials. “Sometimes you have to send a message,” said one.

Reeves’ focus on energizing regulators has received private admiration from the opposition. “We should have done this ourselves,” said a former Tory treasury minister.

However, while some conservatives privately approve, Reeves’ actions have raised some eyebrows on his side of the aisle. She has been accused by former shadow chancellor John McDonnell of leaving the door open for critics to say Labor was “defending corporate abuse and twins”. Another senior left-wing Labor MP said: “He’s desperate.” She seems, however, to be comfortable making such enemies.

The chancellor also sided with the banks this week in a Supreme Court case that will determine whether they have to pay potentially tens of billions of pounds in reparations in a motor finance mis-selling case. A new non-DOM tax regime has been loosened.

Next week, Reeves is also expected to signal his backing for airport expansion in the south-east, including Heathrow, despite fierce criticism from the green lobby and London mayor Sir Sadiq Khan.

Whitehall insiders believe Reeves leaked the move to bounce off his cabinet colleagues; Starmer himself has previously voted against a third runway at Heathrow, while Ed Miliband, who threatened to resign from Gordon Brown’s government over the issue, this week played down any suggestion he would resign. Meanwhile, judicial reviews of contentious infrastructure projects will be reduced.

Given the threat posed to his precarious fiscal plan by slow growth, Reeves told the Treasury to stop focusing on budgets and concentrate on increasing investment.

Officials are working on a variety of projects, some with code names related to the fruit, to win investment in Britain.

One relates to a massive new universal theme park being proposed for a site near Bedford, with officials close to talks between the company and the Treasury saying they are “progressing well”.

Backers of the project claim it could generate up to £50bn in economic value in its first 20 years. The Treasury has been asked to provide financial support, including for the upgrade of an M1 motorway junction and the construction of a new station.

An official briefed on the talks, called Project Mandarin, said they were almost complete: “It’s one of those negotiations that I could conclude if I wanted to.” Another person reporting on the conversations added: “It’s very close. It’s almost there, but it’s not there yet.”

Officials said the support package focused primarily on securing infrastructure investments and improvements, which will be critical to bringing the thousands of people traveling to visit the 500-acre site.

Executives at Comcast, whose universal destinations and experiences are behind the scheme, have told the FT in the past that they wanted to build “one of the best theme parks in the world”.

Universal Destinations & Experiences said: “We continue to have productive discussions with the UK government.”

Along with the theme park, Reeves is also trying to finalize negotiations with AstraZeneca to revive a stalled vaccine manufacturing site in Speke, Merseyside.

The project was halted after the Treasury sought to reduce the amount of state support given to the British Pharmaceutical Company Vaccine Centre, reducing a promise made by the last Conservative administration from around £90m to £40m.

Meanwhile, Reeves is also expected to signal his support for a £9bn road and tunnel across the River Thames in east London, which would use private finance to defray the cost to taxpayers.

There are also signs that the government hopes to avoid any criticism that it is focusing all its firepower on the south-east of England.

The Treasury has announced plans to review the “green book” it uses to assess the value of proposed investment decisions, long the focus of the ire of critics who believe it favors London and the surrounding region.

It has also promised to build a portfolio of investable projects outside the Southeast, with the help of the investment office. Reeves is being watched closely by northern mayors, who had been courted by the Labor government when it first took office.