In a speech today at Siemens Healthineers in Oxfordshire, Chancellor Rachel Reeves outlined an ambitious agenda to grow the UK economy, focusing on AI, green energy, airports improvement and international investment.
With the UK grappling with inflation, a cost-of-living crisis, and post-Brexit economic uncertainty, Reeves’ strategy is to go “further and faster” through stability, reform, and strategic investment. But what exactly are the key actions behind this ambitious vision, and how does the government plan to move forward? Here’s everything you need to know about her recent speech about Labour’s commitment to boosting the UK economy.
The Chancellor of the Exchequer began her speech with optimism, saying that Britain’s potential remains strong despite the challenges. “Everything I see gives me more belief in Britain,” she said, reflecting on her travels around the country. She described the UK as a nation of “strong communities, with small and local businesses at their hearts”, and set growth as the government’s “number one mission.”
Oxford and Cambridge: The New “Silicon Valley”
“We are at the forefront of some of the most exciting developments in the world, like artificial intelligence and life sciences,” Reeves said. Her flagship proposal was to make Oxford and Cambridge a world-leading AI Hub. “This Oxford-Cambridge Arc could add £78 billion to the UK economy by 2035”.
Reeves outlined plans to accelerate the development of key infrastructure to boost AI projects, such as onshore wind farms and data centres, which she described as essential to “driving the AI revolution.” She emphasised that the government has heard calls from business groups like the Institute of Directors, as well as leading companies across sectors—including Mace, Skanska, Arup, and members of the British Infrastructure Task Force such as Lloyds, BlackRock, and Phoenix.
“We’ve now set out plans to go even further,” she added, signalling a commitment to fast-track infrastructure delivery to meet the demands of a rapidly evolving technology. The Chancellor unveiled plans for a new AI growth zone in Colne and a flagship innovation hub at Cambridge University alongside a new Cambridge Cancer Research Hospital. “This is being prioritised for investments as part of wave one of the new hospital program”.
Reeves also announced that Moderna completed the build for their new vaccine production and R&D facilities in Harwell, Oxfordshire, alongside a commitment to invest a further 1 billion pounds in the UK.
She revealed plans to create a new Regulatory Innovation Office that will make regulation more productive in key industries like AI, synthetic biology, and space. An action plan to create a more responsive regulatory environment to support business growth is set to be published in March.
Transport links and roads such as the East West Rail project are set to be improved to cut travel times between these two tech hubs. “Only 66 miles apart, these cities are home to two of the best universities in the world, and the area is a hub for globally renowned science and technology firms. This area has the potential to be Europe’s Silicon Valley. To make that a reality, we need a systematic approach to attract businesses to come here and to grow here” said Reeves. She argued that upgrading train services and roads from Milton Keynes to Cambridge and Oxford will make engineers’ commute easier.
Heathrow’s Third Runway: “A Long-Delayed Decision”
A significant part of Reeves’ speech focused on the issue of expanding Heathrow Airport—a matter that has divided politicians for decades, with London’s Mayor Sadiq Khan reluctant to support third runway due to environmental and noise concerns.
However, Reeves criticised the country’s underinvestment in aviation infrastructure, with Heathrow’s last full-length runway built in the 1940s. She mentioned this could increase potential GDP by 0.43% by 2050, boosting the UK’s global connectivity and with half of it going into areas outside London and the Southeast.
The Chancellor assured that the government is now prepared to make the tough choices required to expand the “country’s hub airport” and boost the UK’s global connectivity so investors can come more often, while improving exports such as Scottish Salmon and Whiskey.
The Green Revolution’s Potential for the UK
In line with the government’s green agenda, Reeves reinforced the idea that there is no conflict between economic growth and achieving net-zero targets. “Net Zero is the industrial opportunity of the 21st century”.
She criticised the delays in renewable energy projects, mentioning a two-year hold-up in approving a solar farm in Cambridgeshire as an example of the bureaucracy slowing progress. To tackle this, Reeves announced the Planning and Infrastructure Bill, which will streamline the planning process and reduce environmental barriers. The bill will also support offshore wind development, with plans to unlock up to £30 billion in investment for green energy projects.
Global Investors and International Trade to Fuel UK Growth
According to a global survey of CEOs by PwC, Britain is now the second most attractive country in the world for businesses looking to invest, the first time that the UK has been in that position for almost three decades. “This is all welcome news, but there is still more that we can and we will do,” Reeves said. She criticised the Conservatives, who she argued “have lacked the courage to confront the chronic underinvestment and stifling regulation that have held back the productive capacity of the UK economy”.
Reeves emphasised on restoring stability to the UK economy, seeing this is essential for attracting international investment. She pointed to the success of the recent Budget Responsibility Act that aims to prevent a repeat of the financial chaos caused by the 2022 mini-budget.
The Chancellor also called for closer economic ties with global partners, including the US, China, and India, stating that the UK needs to work with richer countries to act in the national interest.
Focusing on international trade, she argued that the UK’s relationship with the EU needs to be resettled and that this was mishandled by the previous government.
A “special relationship” with the United States was also mentioned. “The Prime Minister discussed the vital importance of growth with President Trump last weekend, and I look forward to working with the new US Treasury Secretary, Scott Bessent, to deepen our economic relationship in the months and years ahead”.
She highlighted recent successes, such as investments from Iberdrola, Blackstone, and Erin Holdings, as proof that the UK is an attractive destination for global capital.
Reeves announced two new investments from the National Wealth Fund: £65 million to expand the electric vehicle charging network of Connected Kerb and £28 million in Cornish Metals, which produces raw materials for green technologies like solar panels and wind turbines. The Chancellor also committed to publishing a refreshed carbon budget delivery plan later this year, aiming to meet the UK’s net-zero goals while positioning the green transition as a major industrial opportunity.
Infrastructure Improvement to Boost Local Economy
The government will establish strategic partnerships with city regions, starting with Glasgow, West Yorkshire, and Greater Manchester, to deliver more targeted support and investment for regional growth. “Our mission to grow the economy is about raising living standards in every single part of the United Kingdom. Manchester is home to the UK’s fastest-growing tech sector. Leeds is one of the largest financial services centres outside of London. These great northern cities have so much potential”.
Labour is also backing plans for the redevelopment of Manchester United’s Old Trafford Stadium, which promises to create new housing and commercial development around a new stadium to drive regeneration and growth in the area.
In addition, there will be funding for transport upgrades like the Trans-Pennine route and a new mass transit system for West Yorkshire. She announced a review of the Treasury’s Green Book guidance, which will ensure more balanced investment across the UK.
“We are delivering railway schemes to improve journeys for people across the North, including upgrades at Bradford Forster Square, and by electrifying the Wigan to Bolton line, we are committed to supporting the delivery of a new mass transport system in West Yorkshire”
Moreover, Labour will publish the Spending Review and a 10-year infrastructure strategy in the Spring. Reeves said that this will “set out further detail of our plans for infrastructure investment right across the UK, new transport infrastructure can also act as a catalyst for new housing.”
Tackling the Cost of Living Crisis, Skill Shortages and Net Migration
“I protected working people after a cost of living crisis by freezing fuel duty with no increases in their national insurance, income tax or VAT,” Reeves said, addressing the ongoing cost-of-living crisis. “I capped the rate of corporation tax, and I extended our generous capital allowances for the duration of this Parliament as the CBI and the BCC have called for”.
She also defended her decision to increase National Insurance contributions for employers, arguing that while this imposes costs on business, “the cost of irresponsibility would have been far higher”.
In a bid to tackle skills shortages, Reeves announced plans to create a national jobs and careers service. She also revealed upcoming reforms to the welfare and immigration systems, ensuring the UK attracts the “highest-skilled people” from around the world to meet the needs of the economy.
This speech outlined an ambitious strategy to revive the UK’s economic growth through innovative plans and addressing long-standing issues. However, its success will rely on the government’s ability to deliver amid challenges that hinder British families such as the cost of living crisis, and concerns over tax hikes driving businesses away. The path to recovery remains uncertain, and the delivery of these promises in the first half of 2025 are crucial for building confidence.
