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United Kingdom

Rachel Reeves Urges Swift Action on UK Growth Barriers

Britain’s finance minister, Rachel Reeves, announced on Monday that the new government has launched efforts to remove barriers to infrastructure projects and private investment as part of a new “national mission” aimed at stimulating economic growth.

Following the Labour Party’s decisive victory in last week’s election, ending 14 years in opposition, Reeves and Prime Minister Keir Starmer agreed over the weekend on initial steps to demonstrate swift action in addressing deep-rooted challenges.

“We understand that turning things around will take time. We are facing significant challenges, but this marks the beginning,” said Britain’s first female finance minister.

Reeves committed to addressing the longstanding shortage of housing and expediting planning approvals for infrastructure projects, including expanding wind farms, emphasizing that there is no time to lose.

She also extended a welcome to investors who had become wary of the UK since the political upheaval triggered by the 2016 Brexit referendum.

“After 14 years, Britain now has a stable government—one that values business, seeks collaboration with business, and is open for business,” remarked the former Bank of England economist at the Treasury department.

Facing an ambitious agenda, Reeves and Starmer aim to foster growth to fund increased spending on public services without raising taxes for working people—a delicate balancing act given stagnant living standards since 2010 and high public debt.

Britain’s economy has been among the weakest in the G7 since the COVID-19 pandemic, with projected growth for this year below 1%.

Reeves outlined plans to reinstate mandatory housing targets for local authorities, bolster planning departments, and accelerate large-scale renewable energy projects by streamlining national assessments.

“We will not settle for a status quo that defaults to saying ‘no’ in the face of trade-offs, relegating national interests below other priorities,” she affirmed.

Reeves also pledged to lift restrictions on onshore wind farms, encourage pension funds to invest in British companies, and prioritize unresolved planning issues.

She ordered a report on the state of the country’s financial situation, scheduled for release before parliament’s summer recess, preceding a comprehensive budget on taxation and spending later in the year.

Raoul Ruparel, formerly an advisor to Conservative Prime Minister Theresa May and now Director at the Boston Consulting Group’s Centre for Growth, anticipated the report would challenge the credibility of Labour’s inherited budget plans reliant on further spending cuts.

Political instability since the Brexit vote has deterred international investors, with foreign direct investment declining in four of the last five quarters.

“The election results alleviate uncertainty, making it easier for overseas investors to commit,” noted Toby Gibb, head of investment solutions at Artemis fund management.

Addressing voters’ concerns over housing shortages, which have exacerbated economic challenges, Reeves emphasized the government’s commitment to increasing housing and infrastructure development.

“While intent and priorities are clear, overcoming local opposition and labor shortages in construction remain critical to expanding housing supply,” commented Aynsley Lammin, analyst at Investec.

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