Kate Andrews

Has Rachel Reeves got her growth? Today’s speech from the Chancellor in Oxfordshire was not this government’s first attempt to pivot towards a more business-friendly, growth-generating narrative. But it was its best effort yet.  Starting with the highlights. Reeves threw her unabashed support behind a third runway at Heathrow, insisting that the expansion was ‘badly needed’ and that the case had never been stronger for boosting trade; the airport ‘connects us to emerging markets all over the world, opening up new opportunities for growth’. Let’s not get carried away She called on proposals to be submitted by the summer, to start a process that would ensure the fastest and best-value action was taken to get more planes on and off the ground.

On the face of it, the Chancellor’s big growth speech tomorrow could be one of this government’s most significant interventions yet. If Rachel Reeves is serious about starting the building process for a third runway at Heathrow – she is expected to endorse the idea formally tomorrow – she will be single-handedly overturning more than a decade of Nimby consensus under the Tories that such projects simply were politically impossible to carry out. The same goes for her pledge to finally get some homes built, and to ‘take on regulators, planning processes and opposition’ to the growth consensus. These also seemed like an impossible task for the governments that came before her.

‘The golden age begins right now’ said the 47th President of the United States as he began his inauguration speech in the Capitol Rotunda. What followed was a 30-minute speech, during which Donald Trump stayed both on script and on message, reiterating his promise to declare a border crisis, deport foreign criminals, return America’s title of energy independence and to ramp on tariffs on foreign countries to ‘protect American workers and families’.  Trump aides had promised that, eight years on, the President’s second swearing-in speech would be different. Gone were the days of promoting ‘American carnage’. Today, the message was to be one of unity.

International investors may be jittery about the UK’s future, but the International Monetary Fund appears to be more optimistic. The IMF has published its World Economic Outlook report for January, which forecasts the UK will have the third-fastest growth in the G7 this year. It revises upwards its projection for 2025, by 0.1 per cent, to 1.6 per cent. The UK falling in after the United States and Canada does not make good on Labour’s promise to be the fastest growing advanced economy. But after a tumultuous week of gilt fluctuations, bad growth figures and an even worse retail sales update, it’s a good way to be ending the week.

The UK economy has grown for the first time in three months. The Office for National Statistics (ONS) reports that the economy expanded by 0.1 per cent in November after it contracted by 0.1 per cent in both September and October. This uptick is largely thanks to an increase in services output, which grew by 0.1 per cent in November 2024, after falling by 0.1 per cent in October (a downward revision from last month’s estimate that there had been no growth. So has the economy turned a corner? It’s very difficult to spin this morning’s news in a wholly positive light. Yes, it’s good that the economy did not contract again, but November’s numbers are simply more evidence of a stagnant economy.

Rachel Reeves did her best to keep today’s China visit statement on topic. The Chancellor wanted to talk about ‘cooperation’, ‘competing where our interests differ,’ her efforts to break down market barriers and the £600 million she secured in investment. But other MPs had other ideas.  ‘I know the Chancellor has been away,’ said the Shadow Chancellor Mel Stride. ‘So let me update her on the mess she left behind.

Rachel Reeves returns from China this morning to face growing accusations that she has lost her grip on the public finances. This latest bond market crisis has brought into question whether the Chancellor is at risk of – or has already – broken her own fiscal rules. Capital Economics reports that a surge in gilt yields – which are at their highest levels since the financial crash – means that her £12 billion of fiscal headroom is now gone. The Treasury will be desperately hoping that something, anything, calms the markets this week and sees borrowing costs start to fall. Reports that the Chancellor has called on ministers to come up with some quick and spectacular ideas to grow the economy over the weekend are unlikely to cut it.

The new year may have rustled up some surprise stand-offs for the Labour government (mainly calls from X founder Elon Musk for Keir Starmer to resign), but the rise of new problems does not mean the old problems have disappeared. A harsh reminder has been dished out this morning, as long-term borrowing costs reached a 27-year high, calling into question yet again exactly how the Treasury is going to make good on its spending commitments while sticking to the Chancellor’s own fiscal rules. Thirty-year gilt yields hit 5.21 per cent this morning – a level that surpasses the surge in borrowing costs following Liz Truss’s mini-Budget in 2022. The ten-year gilt is now parallel to the peak reached under Truss, too.

It’s not terribly helpful for Keir Starmer that Elon Musk is creating polls on X, asking his 210 million followers if ‘America should liberate the people of Britain from their tyrannical government’. Nor does the Prime Minister seem very happy about the attacks on his record as chief prosecutor, using the Q&A of his healthcare speech this morning to insist that he used his five years in the role to tackle child exploitation ‘head on’. But the mudslinging back and forth across the pond has buried one of the most worrying indicators for 2025 announced so far: business confidence has sunk to its lowest point since Liz Truss’s infamous mini-Budget.