Rachel Reeves’ plans will boost UK but it will take a long time

A third runway at Heathrow, “Europe’s Silicon Valley” between Oxford and Cambridge and relaxing planning constraints. There were a lot of different announcements in Rachel Reeves’ push to revive the UK economy.

The key takeaway, the bottom line of her plans, is that these changes will work – they will boost UK growth.

It is an admittedly low bar for an economy that has not been growing much.

But this is a specific type of growth, long term growth, funded by global investors, who had started to have their doubts about Britain.

A global Silicon Valley-like super city connecting Oxford and Cambridge to new and old population centres in between is the sort of offer that the world’s biggest funds would fall over themselves to invest.

Plug that in to the City and to the Nobel Prize winners at Google’s AI firm DeepMind and the biomedical research centre Crick Institute in Kings Cross, and the country would have a stunning global asset in the 21st Century economy.

Putting money into an integrated grand development plan connecting two of the world’s greatest centres of learning, involving housing, labs, offices, hospitals, reservoirs, roads and rail, is a no brainer for the world’s biggest investors.

This has long been dreamed of, but the reality is that Britain has severely restricted the growth of its most compelling world-beating technological and economic assets. That appears to end here with Reeves’ plans.

Successive governments have simply failed to deploy their political capital to ram through growth-enhancing changes such as Heathrow expansion and especially the potential Golden Triangle of future growth between Oxford and Cambridge.

There has been so much talk about these grand plans. It never seemed to happen, and that reputation had risked becoming embedded in the rolled eyes of the international super investors who own most of Britain’s infrastructure.

There were plenty of numbers in the speech.

But the one number that matters above all here is 156 – the size of the PM’s majority. The chancellor’s speech communicated that she will deploy that near total executive power to flatten the sort of opposition that has prevented or critically delayed these sorts of plans in the past.

Indeed, I understand that the cautious, even lukewarm response from Heathrow so far, has been countered in meetings with government with a promise that they will indeed use that bumper majority.

Farmers noisily protested after the Budget changes to inheritance tax. There will be many more groups with placards beeping their horns outside airports and in the Fens, if this agenda is actually delivered. In many ways that is an early test of the government’s seriousness of trying to transform investment in the country.

The other test is how visible and how quickly changes will materialise. Ministers say especially in the Oxford-Cambridge Silicon Valley of Europe plan, this will be seen within the parliament.

But that hoped-for long term gain has been built on some short-term pain in the economy. Consumer and business confidence fell around the Budget decisions. The chancellor has indicated there will be further tough decisions on welfare and benefits as the government aims to cut back the ballooning costs of supporting people out of work or in work but also receiving benefits.

Businesses in hospitality and retail are bearing a disproportionate burden of the Budget tax rises. From April they will pay more in national insurance as well as a higher minimum wage. Runways in west London, and laboratories in Oxford may not compensate those businesses.

The other big challenge here is just how nimble the government is going to be. The government’s AI strategy released earlier this month might already have been overtaken by events in Hangzhou at DeepSeek. Will all these data centres that Reeves has planned now actually be needed? Strategies for industry, infrastructure and trade are also now on the way.

Timing here is everything. The question is whether the fruits of long-term growth will come through quickly enough.