Rachel Reeves, the Shadow Chancellor, has found herself in a whirlwind of economic urgency following the recent Budget announcement. Until now, she had maintained a pro-business facade, but the unsettling market reactions have triggered a renewed focus on the Treasury. With tensions flaring between the government and unions, robust discussions are underway to devise strategies that could spark economic growth. As Reeves prepares for her pivotal speech next Wednesday, the anticipation is high for announcements that may include cutting planning regulations and unveiling plans for a new runway at London's Heathrow.
Reeves' plan for her upcoming speech was conceived before the Budget, indicating a long-term strategy to tackle growth issues. However, the government's response to business concerns has been deemed inadequate by many. The pressure mounts as Reeves argues more vigorously within her party for infrastructure projects like another runway at Heathrow, a move that aligns more closely with Conservative economic policies than Labour's traditional stance.
Senior sources indicate that the market instability has intensified the drive for economic growth.
"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," said a senior source.
The government's metrics for assessing prosperity are criticized as inconsistent and unconvincing. Treasury insiders reveal that Reeves has been vocally advocating for innovative solutions to stimulate the economy since the Budget.
"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," remarked a Whitehall source.
Reeves' sudden rush to ignite growth is met with skepticism from various quarters. One union leader has described this as a "cross your fingers behind your back moment," reflecting doubts about the feasibility of rapid economic changes. Shifting economic gears poses significant challenges, as emphasized by a senior Labour MP.
"The levers you pull don't just connect to something – the dead hand of the Treasury can't simply control economic growth," they stated.
The government's approach to fostering growth is perceived as aimless by some insiders, with one Whitehall source describing it as "meandering." This sentiment resonates with business leaders who feel increasingly uncertain about the current economic climate.
"There's been nervousness about this year, sentiment has definitely got worse, with a lack of a positive drum beat," commented a FTSE chief executive.
The Budget's aftermath has also unveiled tensions within the Labour Party's relationship with businesses.
"Labour did a great job of pretending to be pro-business up until [the Budget]. No one would say they are now," noted a City source.
Despite these challenges, ministers point to strategic initiatives such as planning changes and efforts to attract major AI companies as potential catalysts for growth. However, union leaders contend that more substantial investments are necessary.
"The bottom line is that growth is anaemic – they need to massively invest," asserted a union leader.