Labour's image as a pro-business party took a hit following the recent Budget, leaving Chancellor Rachel Reeves in a race against time to restore confidence and drive economic growth. The aftermath of the Budget has fueled a renewed sense of urgency, with the focus shifting back to the Treasury. Reeves now faces the dual challenge of navigating tense negotiations with unions and responding to calls from the business sector.
Rachel Reeves' strategy for her upcoming speech next Wednesday was formulated prior to the Budget. However, the current climate has intensified expectations for her announcements. The speech is anticipated to include significant changes, such as cutting back on planning rules and the potential unveiling of a new runway at London's Heathrow Airport. The aim is to reignite economic momentum and showcase Labour's commitment to growth.
The Budget's fallout has led to robust discussions, notably described as "argy bargy" with unions. These intense dialogues underscore the complexity of aligning diverse interests to stimulate the economy. A senior source noted that the need to "move at speed is much clearer," reflecting the urgency that now permeates the Treasury.
Reeves' recent rhetoric bears striking resemblance to that of a Conservative chancellor, highlighting her determination to address economic challenges head-on. Her approach includes enticing big AI companies and implementing planning changes to spur growth. Despite these efforts, some within Labour acknowledge the hurdles in shifting gears, with one union leader dubbing this period a "cross your fingers behind your back moment."
The government's initial months in office revealed that their much-touted masterplan for prosperity was not as robust as portrayed. The metrics evaluating their progress in enhancing the UK's economic standing remain inconsistent, with some indicators appearing bleak. Insiders from the Treasury revealed that Reeves was quick to demand further ideas for economic expansion almost immediately after concluding her Budget address.
"The market wobble brought that frustration to the fore – we talked about growth for a long time… I think it's begun to put rocket boosters under that," commented a senior source.
Labour's pre-Budget portrayal as pro-business seems increasingly tenuous.
"Labour did a great job of pretending to be pro-business up until [the Budget]," remarked a City source.
Whitehall insiders pointed out missed opportunities, suggesting that the preparations for government fell short.
"They lost time because the preparing for government team wasn't really preparing for government – they had the opportunity to come in and show what they were made of and they fluffed it," said a Whitehall source.
The Treasury's role in steering economic growth remains complex, with some within Labour acknowledging that traditional levers may not suffice.
"The levers you pull don't just connect to something – the dead hand of the Treasury can't simply control economic growth," observed a senior Labour MP.
Reeves' renewed push highlights that she and her Cabinet are no longer novices; they are firmly established in their roles and ready to implement decisive changes. This shift reflects an acknowledgment that earlier strategies were insufficient and that new measures are necessary.