Latest news with #SiliconValley-like
Yahoo
14-03-2025
- Business
- Yahoo
UK economy unexpectedly shrinks in January, in blow to Treasury chief ahead of key statement
LONDON (AP) — The British economy unexpectedly shrank during January, piling pressure on Treasury chief Rachel Reeves before a key statement about the state of the public finances later this month. Official figures Friday showed that the economy, the world's sixth-largest, saw output drop by 0.1% during the month, in contrast to expectations for a modest increase and December's solid 0.4% gain. The Office of National Statistics said the weak performance was largely due to bad weather affecting the manufacturing and construction sectors, despite a solid performance by the services sector, which accounts for around 80% of the British economy. Though monthly figures are notoriously volatile and prone to future revision, the decline puts in sharp relief the struggles the Labour government, elected last July after 14 years in opposition, is having in generating growth. Prime Minister Keir Starmer has said raising the U.K.'s economic growth is his government's number one priority over the next five years. Since the global financial crisis in 2008-9, the British economy's growth performance has been historically lackluster. Starmer has pledged to boost living standards and generate funds for cash-starved public services. With growth proving elusive, the party's popularity has fallen sharply since its election victory in July. Critics say Treasury chief Reeves has been partly responsible for the economic slowdown since Labour returned to power, because she was overly gloomy when taking on her role and increased taxes, particularly on businesses. After the January figures, she vowed to 'turn around the poor performance of more than a decade' and that the government will go 'further and faster' in promoting policies to boost growth. In recent weeks, Reeves has set out plans to boost longer-term growth, such as backing a third runway at London's Heathrow Airport. She has also pledged to create a Silicon Valley-like technology hub between the two university towns of Oxford and Cambridge, as well as a 'reset' of the U.K.'s post-Brexit economic relations with the European Union. She has also pointed to the growth benefits of the recently announced ramp-up in defense spending. The monthly decline is an uncomfortable backdrop for Reeves before she delivers a budget statement to Parliament on March 26. Because growth isn't generating the tax revenues hoped and borrowing rates remain relatively high, she is expected to announce a package of spending cuts in order to meet her fiscal rules. Mel Stride, the Treasury spokesman for the main opposition Conservative Party, branded the government a 'growth killer', blaming tax rises and proposed changes to employment rights.
Associated Press
14-03-2025
- Business
- Associated Press
UK economy unexpectedly shrinks in January, in blow to Treasury chief ahead of key statement
LONDON (AP) — The British economy unexpectedly shrank during January, piling pressure on Treasury chief Rachel Reeves before a key statement about the state of the public finances later this month. Official figures Friday showed that the economy, the world's sixth-largest, saw output drop by 0.1% during the month, in contrast to expectations for a modest increase and December's solid 0.4% gain. The Office of National Statistics said the weak performance was largely due to bad weather affecting the manufacturing and construction sectors, despite a solid performance by the services sector, which accounts for around 80% of the British economy. Though monthly figures are notoriously volatile and prone to future revision, the decline puts in sharp relief the struggles the Labour government, elected last July after 14 years in opposition, is having in generating growth. Prime Minister Keir Starmer has said raising the U.K.'s economic growth is his government's number one priority over the next five years. Since the global financial crisis in 2008-9, the British economy's growth performance has been historically lackluster. Starmer has pledged to boost living standards and generate funds for cash-starved public services. With growth proving elusive, the party's popularity has fallen sharply since its election victory in July. Critics say Treasury chief Reeves has been partly responsible for the economic slowdown since Labour returned to power, because she was overly gloomy when taking on her role and increased taxes, particularly on businesses. After the January figures, she vowed to 'turn around the poor performance of more than a decade' and that the government will go 'further and faster' in promoting policies to boost growth. In recent weeks, Reeves has set out plans to boost longer-term growth, such as backing a third runway at London's Heathrow Airport. She has also pledged to create a Silicon Valley-like technology hub between the two university towns of Oxford and Cambridge, as well as a 'reset' of the U.K.'s post-Brexit economic relations with the European Union. She has also pointed to the growth benefits of the recently announced ramp-up in defense spending. The monthly decline is an uncomfortable backdrop for Reeves before she delivers a budget statement to Parliament on March 26. Because growth isn't generating the tax revenues hoped and borrowing rates remain relatively high, she is expected to announce a package of spending cuts in order to meet her fiscal rules. Mel Stride, the Treasury spokesman for the main opposition Conservative Party, branded the government a 'growth killer', blaming tax rises and proposed changes to employment rights.
Asharq Al-Awsat
13-02-2025
- Business
- Asharq Al-Awsat
UK Economy Ekes Out Modest Growth in Final Quarter of 2024
The British economy managed to eke out a quarterly growth of 0.1% in the final quarter of 2024 following a stronger than anticipated performance in December. The Office for National Statistics said Thursday that the 0.4% expansion in December was a result of a broad-based expansion, with pubs doing particularly well in the run-up to Christmas. The fourth quarter figures means the economy grew by 0.9% overall in 2024, The Associated Press reported. The quarterly increase followed no growth in the previous three months and may ease some of the pressure on Treasury chief Rachel Reeves, who critics say has been partly responsible for the economic slowdown since Labour returned to power in July. Last week, the Bank of England halved its growth forecast for the British economy for 2025 to 0.75% as it cut its main interest rate to 4.5%. If that turns out to be remotely accurate, it will be hugely disappointing news for the UK's new Labour government, which has made growth its top mission. The party has pledged to boost living standards and generate funds for cash-starved public services. With growth proving elusive, the party's popularity has fallen sharply since its election victory in July. In recent weeks, Reeves has set out plans to boost longer-term growth, such as backing a third runway at London's Heathrow Airport. She has also pledged to create a Silicon Valley-like technology hub between the two university towns of Oxford and Cambridge, backed the regeneration of the area around Manchester United's Old Trafford soccer stadium, as well as a 'reset' of the UK's post-Brexit economic relations with the European Union. Reeves said the government will go 'further and faster' to bolster growth in the months and years ahead. 'That is why we are taking on the blockers to get Britain building again, investing in our roads, rail and energy infrastructure, and removing the barriers that get in the way of businesses who want to expand," she said.
Yahoo
29-01-2025
- Business
- Yahoo
Reeves's plans will boost UK but it will take a long time
A third runway at Heathrow, "Europe's Silicon Valley" between Oxford and Cambridge and relaxing planning constraints. There were a lot of different announcement's in Rachel Reeves's push to revive the UK economy. The key takeaway, the bottomline of her plans, is that these changes will work - they will boost UK growth. It is an admittedly low bar for an economy that has not been growing much. But this is a specific type of growth, long term growth, funded by global investors, who had started to have their doubts about Britain. A global Silicon Valley-like super city connecting Oxford and Cambridge to new and old population centres in between is the sort of offer that the world's biggest funds would fall over themselves to invest. Plug that in to the City and to the Nobel Prize winners at Google's AI firm DeepMind and the biomedical research centre Crick Institute in Kings Cross, and the country would have a stunning global asset in the 21st Century economy. Putting money into an integrated grand development plan connecting two of the world's greatest centres of learning, involving housing, labs, offices, hospitals, reservoirs, roads and rail, is a no brainer for the world's biggest investors. This has long been dreamed of, but the reality is that Britain has severely restricted the growth of its most compelling world beating technological and economic assets. That appears to end here with Reeves' plans. Successive governments have simply failed to deploy their political capital to ram through growth-enhancing changes such as Heathrow expansion and especially the potential Golden Triangle of future growth between Oxford and Cambridge. There has been so much talk about these grand plans. It never seemed to happen, and that reputation had risked becoming embedded in the rolled eyes of the international super investors who own most of Britain's infrastructure. There were plenty of numbers in the speech. But the one number that matters above all here is 156 - the size of the PM's majority. The chancellor's speech communicated that she will deploy that near total executive power to flatten the sort of opposition that has prevented or critically delayed these sorts of plans in the past. Indeed, I understand that the cautious, even lukewarm response from Heathrow so far, has been countered in meetings with government with a promise that they will indeed use that bumper majority. Farmers noisily protested after the Budget changes to Inheritance Tax. There will be many more groups with placards beeping their horns outside airports and in the Fens, if this agenda is actually delivered. In many ways that is an early test of the government's seriousness of trying to transform investment in the country. The other test is how visible and how quickly changes will materialise. Ministers say especially in the Oxford-Cambridge Silicon Valley of Europe plan, this will be seen within the parliament. But that hoped-for long term gain has been built on some short-term pain in the economy. Consumer and Business confidence fell around the Budget decisions. The chancellor has indicated there will be further tough decisions on welfare and benefits as the government aims to cut back the ballooning costs of supporting people out of work or in work but also receiving benefits. Businesses in hospitality and retail are bearing a disproportionate burden of the Budget tax rises. From April they will pay more in national insurance as well as a higher minimum wage. Runways in west London, and laboratories in Oxford may not compensate those businesses. The other big challenge here is just how nimble the government is going to be. The government's AI strategy released earlier this month might already have been overtaken by events in Hangzhou at DeepSeek. Will all these data centres that Reeves has planned now actually be needed? Strategies for industry, infrastructure and trade are also now on the way. Timing here is everything. The question is whether the fruits of long term growth will come through quickly enough.
Euronews
29-01-2025
- Business
- Euronews
UK Chancellor bets on third Heathrow Airport runway for boost to growth
Heathrow Airport's plan to build a third runway at London's main hub has been given a boost by Chancellor Rachel Reeves. During a speech aimed at promoting growth for the UK and turning around the economy, Reeves said a third runway would bolster the country's long-term economic growth prospects. "We cannot duck the decision any longer," she said. "The case is stronger than ever." Reeves said the government was inviting proposals over its construction by the summer and that it would then make a full assessment. "This will ensure that the project is value for money and our clear expectation is that any associated service transport costs will be financed through private funding," she said. In her speech, Reeves insisted the runway will be "delivered in line with our legal, environmental and climate objectives". Reeves' support for a third runway came in a wide-ranging speech on boosting UK growth rates, which have been historically low since the 2008 global financial crisis for a variety of reasons. She also outlined plans for the building of nine new water reservoirs, pledged to create a Silicon Valley-like technology hub between the two university towns of Oxford and Cambridge, as well as a "reset" of the UK's economic relations with the European Union, five years after Britain left the bloc. The Labour government badly needs growth rates to increase over the coming years, so it can lift living standards following the cost-of-living crisis and to get money into ailing public services, as well as reduce the UK's soaring public debt. Something needs to be done for the economy Since taking office in July, Reeves and Prime Minister Keir Starmer have been criticised for talking down the economy and for increasing taxes on business, a combination that critics argue have led to a growth downturn in the past few months and the sharp downturn in the government's ratings in opinion polls. Although a third runway won't do much to bolster economic growth in the near-term, Reeves hopes that the announcement itself will provide investors with a signal that the government is serious about turning the economy around. "We are not waiting for years into the future," she said. "We want to do things now, to turn around the performance, and we want to give businesses and investors confidence that this is a country to start doing things, to start making things in again." It's been a while coming A third runway at Heathrow has been discussed since 1946 in the aftermath of World War II, but has never got off the ground because of many reasons, including changes of government as well as legal challenges. Meanwhile, other European hub airports, have grown. Paris' Charles de Gaulle airport has four runways, while Amsterdam's Schiphol has six. Heathrow's plan to build a third runway - which has been under discussion since 1946 in the aftermath of World War II - received parliamentary approval in June 2018. It was subsequently delayed by legal challenges, and the Covid pandemic. Heathrow chief executive Thomas Woldbye had previously said he would not continue developing the project without the government confirming that it wanted expansion. Woldbye described Reeves' speech as "the bold, responsible vision the UK needs to thrive in the 21st century". Some investor scepticism Commenting after the speech, Lindsay James, investment strategist at Quilter Investors said: "Today's speech has also seen the re-emergence of plans to expand various UK airports, including Heathrow. "It is debatable whether these airport developments are the right short-term target for growth and solving the UK's productivity puzzle, and it is likely to spark strong opposition. These would no doubt be long-term projects which could take upwards of a decade to complete, and we could wait even longer for any real economic impact. There also appears to be no public funding to help spur on the plans, and the approval process could be another hurdle. "Instead, the focus should be on upskilling the labour market and improving labour mobility through both the tax system and planning measures." Business supports plan but environment campaigners not happy Business has long supported the creation of a third runway at Heathrow, which is operating at near full-capacity and which often means planes are left circling the capital before they can land. Campaigners have for decades opposed a third runway on environmental concerns and Reeves' announcement is likely to face vociferous opposition, including from fellow members of the governing Labour Party, including London Mayor Sadiq Khan. The construction of a third runway will mean the demolition of more than 700 houses and parts of the key M25 motorway will have to be moved into a tunnel.
