Chancellor Rachel Reeves has indicated she will ignore environmental objections to a third landing strip at Heathrow to prioritize economic growth, a stance likely to put her at odds with colleagues including the Home Secretary. energy, Ed Miliband.
Speaking as she began a 48-hour speech to international investors at the World Economic Forum in Davos, Ms. Reeves said she would support infrastructure projects even where they are unpopular.
THE Heathrow expansion has been debated for nearly 20 years, but despite consistent support from business groups and a consensus it would boost economic activity, environmental and political objections have prevented it.
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She was asked directly if she would now put the track, as well as the expansion, up for grabs. London And Luton ahead of the UK’s net zero emissions commitments, Ms Reeves said: “I’m not going to comment on speculation, but what I would say is that when the last government was faced with difficult decisions about opportunity to support infrastructure investment, the answer always seemed to be no. .
“We cannot continue like this because if we do we will miss out on crucial investments here in Britain. You have already seen a number of decisions, notably on Stansted and City Airport, on energy projects, on transport infrastructure, because we are determined to develop the economy.
The Chancellor’s trip to Davos comes with an economic program subject to increased scrutiny after a turbulent start to the year, including a rising borrowing costs and data showing the the economy has stagnated since the elections.
Business groups also questioned the increase in employment costs in the Budget, but Ms Reeves insisted the UK is internationally competitive and has a strong case to be made. assert itself on international markets.
“If you compare UK tax to other countries around the world, we remain very competitive and have the lowest corporation tax in the G7. Among European countries, we have the lowest employment taxes. Britain is therefore an attractive place to invest. »
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Politics can get in the way of economics when it comes to airport expansion
Ms Reeves also welcomed the dismissal of the president of the Competition and Markets Authoritya regulator regularly accused of unnecessarily slowing down transactions, a sign that it was serious about growth.
“We have enormous strengths as a country and this government is reforming the planning system, reforming the regulatory system, making it easier for businesses, all with the aim of improving the situation for workers,” he said. she declared.
The UK is not a target
The chancellor said she did not think the UK would be a target for customs tariffs under threat by the president Donald Trumplargely because Britain has a trade deficit with America and plans to meet the new Treasury Secretary once he is confirmed.
Growth trade-offs highlighted
The saga of a third runway at Britain’s largest airport encapsulates, perhaps better than any other, the compromises needed to prioritize growth.
Airport expansion is a proven growth vector. Existing Heathrow investors are desperate to expand, despite the cost of complications.
But for a decade, political opposition, from Boris Johnson to Sadiq Khan, has stood in the way.
Of course, there are strong environmental arguments against those that a government committed to reaching net zero emissions by 2050 might consider, and Ed Miliband can be expected to make them.
But if growth is truly the priority, then at some point they will have to choose.
Given the multiple avenues of opposition and the strength of feeling inside and outside the cabinet, Ms. Reeves’ position does not mean that a leak is now more likely than it was ago six months.
However, this could be less unlikely and, as a short-term signal to the investors it is courting in Switzerland, it is a start.
“I believe in free trade and open trade, and I will promote this to my American counterparts. I am excited about the opportunity to work with the new Trump administration.
“Trade between the UK and the US is worth £300 billion a year, a million Britons work for US companies, a million Americans work for UK companies, so our economies are closely linked, and I look forward to improving and strengthening this relationship. »
Privately, some international investors and British business leaders at Davos questioned the clarity of Ms Reeves’ message, but she has received public support from major businesses.
Bill Winters, chief executive of Standard Chartered bank, told Sky News: “I think the chancellor is doing the right thing in sending the message that the UK is open for business.
“She also made very clear statements that we were going to cut through some of the regulatory red tape in a safe and sound way. We’ll see exactly how it goes. So I’m encouraged, but obviously she has a huge challenge ahead.