UK Chancellor of the Exchequer Rachel Reeves delivers a speech at the Treasury, to an audience of business figures and senior stakeholders, announcing the first steps the new Labor Government will take to deliver economic growth, in London on 8 July 2024.
Jonathan Brady Afp | Getty Images
LONDON – Britain’s new finance chief on Monday outlined a series of measures to revive Britain’s economic growth and tackle the national housing shortage.
“I have warned repeatedly that whoever wins the general election will get the worst situation since World War II. What I have seen in the last 72 hours has only been confirmed,” Finance Minister Rachel Reeves said in her first major speech. in a post there, adding that “there is no place where reform is needed more urgently than in the case of our planning system.”
A former Bank of England economist, Reeves was appointed Britain’s first female chancellor – the equivalent of finance minister – on Friday, when newly invested Prime Minister Keir Starmer named his first cabinet. Before his first speech, he seized on economic growth as a party priority and a “national mission.” He is not expected to deliver the first state Budget until the fall and on Monday said he would reveal a clear timeline “in due course.”
Reeves added that he had instructed Treasury officials to provide an assessment of the UK government’s legacy of the previous Conservative administration, which he aimed to present to Parliament before the summer recess.
Housing and planning took center stage in Reeves’ Monday speech:
“First, we will revise the national planning policy framework, consult on a new growth-focused approach to the planning system before the end of the month. Including restoring the mandatory housing target. And now we will end the absurd restrictions on new land. wind (farming) in England,” he said.
Housebuilding has emerged as a key priority of the Labor government, which is seeking to remove the red tape that continues to hamper housing supply and revive the country’s real estate market. A total of 212,570 new homes were completed last year under the Conservative administration, according to government figures, while the Resolution Foundation think tank at the end of March found that British households received “inferior products in terms of quantity and quality,” although, “Compared to the general price level, The UK has the highest quality adjusted house prices of any advanced economy.”
Shares of housebuilders perked up amid expectations that last week’s Labor win will reignite momentum in planning. The faction previously pledged to build 1.5 million new homes (300,000 a year) and reaffirmed that goal in its latest campaign manifesto, saying it would not be “afraid to use the power of intervention to build the necessary homes,” if necessary.
“We are going to get Britain building again. We are going to get Britain’s economy growing again. And there is no time for waste,” Reeves said on Friday.
His comments come as Britain recovers from a shallow recession in the latter half of last year and a period of economic uncertainty, following Britain’s departure from the European Union, the Covid-19 pandemic and international inflationary pressures due to Russia’s invasion of Ukraine. and fighting again in the Middle East. London has also struggled to regain its luster as a global financial center amid a lack of new IPO listings.
“In an uncertain world, the UK is the place to do business,” the new finance chief said on Monday. “I know that many businesses have seen Britain in the last few years and have doubted whether we are a safe haven for investment. I want to change, and with me as Chancellor, I believe they will.”
Labor faces a picture of a wilting economy in the short term – the UK Office for Budget Responsibility expects GDP growth of just 0.8% this year, followed by an expansion of 1.9% in 2025. The International Monetary Fund projects growth this year at 0.5% more soil. Considering the outlook, public sector net debt, excluding public sector banks, stood at 99.8% of GDP at the end of May, according to official data.
“Our number one mission is to have the highest growth in the G7, with good jobs and productivity in all countries,” Reeves said in his speech.
In a 135-page manifesto, the current ruling party pledged to deliver “wealth creation”, as well as raise £7.35 billion ($9.42 billion) in 2028-29 to fund public services by closing further tax loopholes. It also plans to create a £7.3 billion National Wealth Fund to channel funding into steel, automotive, carbon capture technology and gigafactories.
As part of his wider monetary policy, he stressed that the new Labor administration has no current intention to change the way Bank of England reserves are treated or the interest they earn.
