UK’s Reeves Sees No Trade Off Between Growth and Net Zero Goal
(Bloomberg) -- Chancellor of the Exchequer Rachel Reeves insisted the UK doesn’t have to choose between its climate goals and pursuing growth, as she delivered a long-heralded speech on boosting the economy — including plans to expand Heathrow airport.
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“There is no trade-off between economic growth and net zero, quite the opposite,” Reeves said Wednesday at a Siemens Healthineers AG facility in Oxfordshire, standing at a podium bearing the legend “Kickstart Economic Growth.”
“Net zero is the industrial opportunity of the 21st century and Britain must lead the way,” she added.
With growth stuttering and a slew of business and consumer confidence indicators turning red, Reeves is under pressure to turn the UK economy around, especially after coming in for criticism for her gloomy narrative about the state of the public finances in the run-up to the budget in October. She and Prime Minister Keir Starmer are hoping that a prospectus of deregulation and unlocking long-delayed infrastructure projects will attract investors and spur growth.
Still, there are splits within the cabinet and wider Labour Party over aviation expansion, particularly at Heathrow, with senior figures citing environmental concerns around noise, air pollution and greenhouse gases. Some in the government also doubt the extent to which the project would boost the economy.
“I can confirm today that this government supports a third runway at Heathrow,” Reeves said later in the speech.
Trade Talks
In her speech on Wednesday — the centerpiece of the push for growth that the government has trumpeted since the start of the year — Reeves also said that Business Secretary Jonathan Reynolds would shortly travel to India to recommence trade talks, that Work and Pensions Secretary Liz Kendall would set out plans to reform health and disability benefits and that she’d continue to pursue an economic reset with the European Union.
The chancellor has been seeking to win back the support of the business community after her budget on Oct. 30 sparked anger with its £40 billion ($49.7 billion) of tax rises, including a major increase in the national insurance payroll tax levied on employers. She’s also been hit by a wave of bad economic data in recent weeks, with key surveys showing jobs being lost and private sector activity stagnating.
Reeves acknowledged the impact of her tax increase on companies on Wednesday, saying that “there are costs to responsibility.”
“The costs of irresponsibility would have been far higher,” she said, defending the move as necessary to repair the UK’s public finances. “Taking the right decisions and the responsible decisions does not always mean taking the easy decisions.”
The push for growth has also been made more urgent by the market turbulence earlier this month, which exposed the fragility of Reeves’ fiscal position and raised the prospect of Reeves having to cut spending to meet her self-imposed fiscal rule that day-to-day expenditure should be covered by tax receipts by 2029-30.
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