Chancellor Rachel Reeves has indicated she will overrule environmental objections to a third runway at Heathrow in order to prioritise economic growth, a position likely to bring her into conflict with colleagues including energy secretary Ed Miliband.

Speaking as she began a 48-hour pitch to international investors at the World Economic Forum in Davos, Ms Reeves said she would back infrastructure projects even where they are unpopular.

The expansion of Heathrow has been debated for almost 20 years but despite the consistent support of business groups and a consensus it would boost economic activity, environmental and political objections have prevented it.

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Asked directly if she would now put the runway, along with expansion at Gatwick and Luton ahead of the UK’s net zero commitments, Ms Reeves said: “I’m not going to comment on speculation, but what I would say is when the last government faced difficult decisions about whether to support infrastructure investment, the answer always seemed to be no.

“We can’t carry on like that, because if we do, we will miss out on crucial investment here into Britain. You’ve already seen a number of decisions, including on Stansted and City Airport, on energy projects, on transport infrastructure, because we are determined to grow the economy.”

The chancellor’s trip to Davos comes with her economic program under increased scrutiny after a bumpy start to the new year, including a rise in borrowing costs and data showing the economy has stagnated since the election.

Business groups have also questioned the increase in employment costs in the budget, but Ms Reeves insisted the UK is competitive internationally, and has a strong case to make to international markets.

“If you look at the UK’s taxation compared with countries around the world, we remain highly competitive, we have the lowest corporation tax in the G7. Amongst European countries, we have some of the lowest employment taxes, So Britain is an attractive place to invest.”

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Ms Reeves also hailed the removal of the chair of the Competition and Markets Authority, a regulator regularly blamed for unnecessarily slowing down deals, as a sign she was serious about growth.

“We’ve got huge strengths as a country and this government is reforming the planning system, reforming the regulation system, making it easier for businesses to get things done, all with the purpose of making working people better off,” she said.

UK not a target

The chancellor said she did not think the UK would be a target for tariffs threatened by president Donald Trump, largely because Britain has a trade deficit with America, and that she planned to meet the incoming Treasury secretary once he is confirmed.

Growth trade offs thrown into stark relief

Paul Kelso

Business and economics correspondent

@pkelso

The saga of a third runway at Britain’s biggest airport encapsulates, perhaps better than any, the trade-offs required to prioritise growth.

Airport expansion is a proven vehicle for growth. Heathrow’s current investors are desperate to expand, despite the cost of complications.

But for a decade political opposition, from Boris Johnson to Sadiq Khan, has stood in the way.

Of course, there are sound environmental arguments against that a government committed to net zero by 2050 might consider, and Ed Miliband can be expected to make.

But if growth really is the priority then at some point they have to choose.

Given the multiple avenues for objection and the strength of feeling inside and outside cabinet, Ms Reeves’ position does not mean that a runway is now more likely than it was six months ago.

It may however be less unlikely, and as a short-term signal to the investors she is courting in Switzerland, that is a start.

“I believe in free and open trade, and I’ll be making that case to my counterparts in the United States. I’m excited about the opportunity to work with the new Trump administration.

“Trade between the UK and the US is worth £300bn a year, a million Brits work for American firms, a million Americans work for British firms, so our economies are closely intertwined, and I look forward to enhancing and strengthening that relationship.”

Privately some international investors and British company bosses in Davos have questioned the clarity of Ms Reeves’s message, but she has received public support from significant companies.

Bill Winters, the chief executive of bank Standard Chartered, told Sky News: “I think the chancellor is doing the right thing in terms of putting the sign out that the UK is open for business.

“She’s also made very clear statements about the fact that we’re going to reduce some of the red tape set back to regulation in a way that’s safe and sound. Exactly how that’s going to work through, we’ll see. So I’m encouraged, but obviously, she’s got a huge, huge challenge.”

Donald Trump has attempted to negotiate a potential TikTok sale on live television, in what was supposed to be an announcement about investment in artificial intelligence (AI) infrastructure.

The US president was holding a news conference about a $500bn (£405bn) investment in AI infrastructure in the country, but was questioned about a range of topics.

At one point he attempted to negotiate the sale of TikTok with Oracle co-founder Larry Ellison, who is said to be worth more than $204bn (£165bn).

Mr Trump also had to defend some of his actions just one day into his second term.

When the topic of TikTok was raised, Mr Trump said he was “open” to his close friend Elon Musk buying the app, adding: “I would be, if he wanted to buy it. I’d like Larry [Ellison] to buy it too.”

He continued: “I have the right to make a deal, the deal I’m thinking about, Larry let’s negotiate in front of the media.

“The deal I think is this. I’ve met with the owners of TikTok, the big owners, it’s worthless if it doesn’t get a permit… with a permit it’s worth like a trillion dollars.

“What I’m thinking of saying to someone is buy it and give half to the US, half, and we’ll give you a permit… the US will be the ultimate partner and the US will make it very worthwhile for them.”

“Sounds like a good deal to me Mr President,” Oracle co-founder Mr Ellison said, when asked by the president about the offer.

During the press conference, Mr Trump also said he received a “very nice letter” from the outgoing Joe Biden.

“It was a little bit of an inspirational type letter, joy, do a good job, important, very important the job is, I think it was a nice letter, I think I should let people see it… I appreciated the letter,” he said.

Capitol riot pardons

As part of a blitz of executive orders Mr Trump signed on Monday, he issued pardons for more than 1,500 people involved in the Capitol riot – including the Proud Boys and Oath Keepers leaders.

When asked how he justified pardoning convicted violent rioters, some of whom attacked police, he said: “I am the friend of police more than any president that has been in this office.

“They’ve been given a pardon, I thought their sentences were ridiculous and excessive.”

When further questioned over the words of his vice president JD Vance, who said no violent rioters would be pardoned, Mr Trump claimed they had “served years in jail and murderers don’t even go to jail in this country”.

Tariff countdown

Across the campaign trail, Mr Trump has repeatedly raised the prospect of using tariffs against other countries.

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But for the first time, he gave a date for potentially bringing them in.

He vowed to hit the European Union (EU) with tariffs and said his administration was discussing imposing an additional 10% tariff on goods imported from China from 1 February because, he claimed, fentanyl was being sent from China to Mexico and Canada, then on to the US.

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“The European Union is very, very bad to us, so they’re going to be in for tariffs. It’s the only way… you’re going to get fairness,” he said.

The Treasury borrowed more than expected last month to record the highest December sum for four years, official figures have shown, with higher debt interest payments adding to the bill.

The Office for National Statistics (ONS) reported a net borrowing figure for December of £17.8bn when a sum just above £14bn had been expected by economists.

It left public sector net borrowing £10.1bn up on the same month last year and £8.9bn higher than at the same point in the last financial year but still within the range expected by the Office for Budget Responsibility.

Borrowing is on the up amid a budget-led drive for public sector investment, but the ONS data showed an £8.3bn debt interest bill – the third-highest December total on record.

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The report said that higher bill was mainly explained by shifts in the rate of inflation linked to the borrowing.

A £1.7bn payment for the repurchase of military dwellings added to the total December figure.

The data was revealed as Chancellor Rachel Reeves attends the World Economic Forum in Davos for a series of meetings with global business leaders in a bid to showcase the UK.

There is a chill, however, around the UK’s immediate economic prospects with investors recently piling pressure on her stewardship of the public finances by demanding higher risk premiums to hold UK government debt in the form of bonds, known as gilts.

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Long-term borrowing costs hit highs not seen since 1998 earlier this month, with the 30-year UK gilt yield still above 5%.

It ticked up by eight basis points in the wake of the ONS report being released.

The first six months in charge of the public finances have proved a baptism of fire for the chancellor, who promised during the election campaign to make economic growth her top priority.

But she and the prime minister have been subsequently accused of shattering confidence through warnings of a “tough” budget ahead due to an alleged black hole in the public finances inherited from the Tories.

It was measured at £22bn and her fiscal statement on 30 October put business mainly on the hook for £40bn of tax increases announced.

The economy is estimated to have largely flatlined during the second half of last year, with major employers warning that investment, jobs and pay growth ahead are under threat to help offset the impact of the additional costs due from April when tax hikes, including from employer national insurance contributions, take effect.

They have also stated that higher prices for consumers will also form part of the mix.

Employment figures released on Tuesday suggested that firms were already taking action.

Data from HM Revenue & Customs showed the number of payrolled employees was estimated to have fallen by 47,000 during the 12 months to December – the biggest drop since November 2020.

Economists see economic growth being supported this year by public sector investment announced in the budget.

The big question mark is over the contribution from the private sector.

Jessica Barnaby, deputy director for public sector finances at the ONS, said: “At almost £18bn, borrowing last month was the third highest in any December on record.

“Compared with December 2023, spending on public services, benefits, debt interest and capital transfers were all up, while an increase in tax receipts was partially offset by a reduction in national insurance contributions, following the rate cuts earlier in 2024.”

Chief Secretary to the Treasury Darren Jones said of the data: “Economic stability is vital for our number one mission of delivering growth, that’s why our fiscal rules are non-negotiable and why we will have an iron grip on the public finances.

“Through our spending review we will interrogate every line of government spending for the first time in 17 years. We’ll root out waste to ensure every penny of taxpayer’s money is spent productively and helps deliver our Plan for Change.”