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The UK government’s main objective is to revive economic growth, said Chancellor Rachel Reeves. On Wednesday, she disclosed several strategies to boost the country’s economy. However, critics have argued that some of the proposed projects, like expanding Heathrow Airport, would not help in the near term. BBC Verify analyzed some of the significant statistics and assertions made by the government.
The most recent official data shows that the UK economy’s overall size barely increased between the July 2024 election and November 2024. The Office for Budget Responsibility, the government’s official forecaster, has predicted 1.6% GDP growth for 2029, which would be well below the pre-2008 financial crisis average growth of 2.8% per year. However, the International Monetary Fund anticipates that the UK’s growth rate for 2025 and 2026 will be higher than that of France and Germany. Lower GDP growth rates equate to slower growth in wages, income, and overall living standards.
Allowing Heathrow to build a third runway will “create 100,000 jobs,” according to the Chancellor. She cited a new report by the consulting firm Frontier Economics, which found that it could increase the UK’s potential GDP by 0.43% (£17bn) by 2050. This estimate matches those of an autonomous commission by Sir Howard Davies in 2015, which concluded that a third Heathrow runway would support UK trade, enhance productivity, and push GDP up by 0.65-0.75% by 2050 in comparison to not building one. Nonetheless, most analysts believe that it could take a long time before construction for the new runway starts.
The chancellor asserted that an Oxford and Cambridge Growth Corridor “could add up to £78bn to the UK economy by 2035.” This project would connect Oxford and Cambridge with new transport links and allow the two university and research centers to expand. The Treasury has cited research by an industry group called the Oxford-Cambridge Supercluster in support of the Chancellor’s figure. It has indicated that this £78bn is a cumulative figure over ten years, not an increase in a given year. The analysis proposes that the initiative could add £25bn in GVA per year to the UK economy by 2035.
Chancellor Reeves has claimed that allowing UK companies to access the funds from their “defined benefit pension” pots, held on behalf of their workforces to fund their retirement, will aid economic growth. These schemes promise an annual pension payment to retired workers based on their salary while they were working. Many defined benefit pension pots have moved into surplus in recent years due to the pandemic’s rise in interest rates, indicating that their financial assets are higher than their liabilities. The Treasury has approximated that about 75% of defined benefit schemes are now in surplus, totaling £160bn. The chancellor aims to legislate to enable firms to use these funds to invest while keeping safeguards to protect and guarantee workers’ pension payouts.
In conclusion, the UK government aims to stimulate economic growth by implementing several strategies proposed by Chancellor Rachel Reeves. Heathrow Airport’s expansion, the Oxford and Cambridge Growth Corridor, and pensions’ reform are included. The impacts of an infrastructure project on growth are uncertain and very sensitive to the researchers’ assumptions. However, infrastructure projects would assist the UK economy in expanding more quickly
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