These past few weeks I have met dozens of businesses from across the United Kingdom. Pub and restaurant owners in Cornwall and Kent. Defence manufacturers in Belfast and Moray. Investment opportunities in Aberdeenshire and Port Talbot.
I have seen an economy that has the ingredients for success – a skilled and committed workforce, world-class universities, innovative businesses. You don’t hear Reform or the Conservatives talk of this success. They want you to believe the economy is broken. That our best days are behind us and that the path of decline is inevitable. I fundamentally reject that. It is not the country I see around us, and it is not the future I believe in. Britain’s economy is not broken, but I know that in recent years it has got stuck.
Austerity, a chaotic Brexit and Liz Truss’s disastrous mini-budget led to more than a decade of stagnation. Our economy became trapped in a cycle of low growth, repressed investment and stagnant income that weakened our competitiveness on the global stage.
The months and weeks before any budget are filled with people speculating about – or claiming to know – what tax and spend decisions I will take or what the Office for Budget Responsibility will conclude. This budget is no different – I get that. I will set out the decisions I take in a responsible manner.
But just as my focus over the past 12 months has been about kickstarting economic growth for the benefits of working people, so will my next. Because Britain’s productivity problem is not an abstract, technocratic one – it directly affects every working family in Britain who feel they are squeezing every penny to make ends meet. When businesses can’t grow, wages stagnate and there is less money in the pockets of working people. When infrastructure is inadequate, costs rise, and opportunities are lost.
When skills do not match economic needs, potential goes unfulfilled. With lower productivity, tax revenues go down and our public services face cuts. And with the world changing, Britain has been left too exposed to global shocks.
Working people across Britain are striving and grafting, but they haven’t had the tools they need for the job. They have not seen their incomes rise as a reward for their hard work. There is that sinking feeling that families and businesses across the country feel at the end of every month that they are working hard, but getting nowhere. There is nothing progressive – nothing Labour – about an economy that is not productive and does not reward those who contribute. Since I became shadow chancellor and then chancellor, I have known that breaking this cycle will require our sustained effort across many fronts.
Because if renewal is our mission and productivity is our challenge, then investment and reform are our tools. It’s investment into our infrastructure, from the train lines and roads that connect businesses and communities to each other to the building of new houses that working people need to fulfil the dream of owning a home. It’s investing in British workers and raising skills in this country, so we end business reliance on cheap migrant workers.
We are providing that investment and unblocking the barriers to it too. Breaking down the planning system to get Britain building, cutting the unnecessary red tape that has stifled innovation rather than enabled it, and filling the skills gaps that are leaving businesses unable to expand and working people unable to progress.
We are making progress: wages grew faster in our first 10 months in power than the first 10 years of Conservatives, 384,000 more jobs have been created, trade deals now struck with the United States, India and the European Union, the cost of a representative new variable rate mortgage lower than when we were elected, and millions of working people getting a pay rise from a boost to the national minimum wage.
But I know there is more to do – and that is what this autumn will be about. Because I do not accept decline as inevitable. If Labour’s first year in power was about fixing the foundations, then the second year is about building a stronger economy for a renewed Britain. A renewed economy that works for working people – and rewards working people. That is my priority. That is my mission. That is what I am determined to deliver.
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Rachel Reeves is chancellor of the exchequer
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