Chancellor’s enthusiasm ‘has never burned brighter’ – but will her plans finally boost growth?
The chancellor spent most of her first six months issuing dire warnings about the calamitous state of the public finances she inherited.
But now, in a dramatic change of tone, Rachel Reeves is celebrating the UK’s economic possibilities.
Inspired by Donald Trump’s economic boosterism, and despite the UK’s flatlining growth figures, she told Trevor Phillips she’s spent the past few days in Davos “shouting on the world stage about everything our great country has to offer”.
“My enthusiasm and excitement… has never burned brighter.”
But this optimistic message isn’t just part of a new international sales pitch, a riposte to critics who believe the chancellor damaged investor confidence in the UK with her gloomy previous prognosis.
Instead, it’s part of the government’s drive to reconnect with businesses bruised by her tax-raising budget – an attempt to demonstrate that economic growth genuinely is its number one priority – at the expense, perhaps, of all else.
Of course, the chancellor argues that growth is needed to deliver the level of public services voters expect from a Labour government – without rapid improvements to the public finances, departments are likely to face austerity-level cuts.
Now we’re finally getting more detail on the practical strategy to deliver the growth that has proved so elusive for successive governments in recent years – but many of the measures involved are highly controversial.
Read more: Reeves to seek billions from corporate pension surpluses
From reducing planning hurdles to demanding regulators strip out red tape, in some ways, the Labour government is now seeking to enact many of the policies promised by Liz Truss.
Asked about the comparison by Trevor Phillips this morning, Ms Reeves didn’t deny the similarity, arguing only that “we’re doing practical things to get that growth, not just talking about it”.
On Wednesday in a big speech on growth, we’ll hear more about these practical steps.
The biggest expected announcement is about the long-awaited expansion of Heathrow Airport, as well as plans for Gatwick and Luton.
File pic: AP
As a symbol of going for growth above all else, it couldn’t get much bigger, but the reason the project has failed to get off the ground is that so many people object to it so passionately – for a wide range of reasons, from concern over emissions and our net zero commitments to noise pollution.
Ms Reeves told Trevor Philips today the decision would be taken with “collective ministerial responsibility”.
That may be easier said than done.
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Previously, many members of the cabinet, including Sir Keir Starmer, Environment Secretary Steve Reed and Energy Secretary Ed Miliband voted against expanding the west London airport.
Supporting the plans will surely be uncomfortable for many on the Labour benches, especially with the Mayor of London so implacably opposed.
Asked this week if he’d consider resigning over it, though, Mr Miliband responded: “Don’t be ridiculous, no.”
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Reeves: ‘Happy to look at’ joining pan-EU trading group.
Perhaps the clearest indication of the government’s economic focus comes with the chancellor’s willingness to discuss the possibility of joining a European customs grouping, the Pan Euro Mediterranean Convention.
“We are absolutely happy to look at these proposals,” she told Trevor Phillips – quite a contrast to the non-committal answers given by other ministers earlier this week.
The Conservatives are predictably up in arms, with Andrew Griffiths, the shadow business secretary, quick to ring the Brexit alarm bell.
“We must avoid undoing Brexit by the back door by aligning with the EU’s low growth model,” he said.
While the prime minister has long promised a “reset” in relations with the EU, any hint of backpedalling on Brexit is so politically sensitive that discussion about moving towards a closer economic relationship is always muted.
The fact Ms Reeves is even looking into this is perhaps, more than anything, a sign of their desire to show they’re willing to consider all options.
But as with the airports, it’s likely to be a very long time before any of these pro-growth intentions have a practical impact on GDP.
Politics
Shouts of ‘genocide’ in Commons as David Lammy denounces Israel’s ‘intolerable’ actions in Gaza
The foreign secretary has denounced Israel’s actions in Gaza as “intolerable” but stopped short of saying it had committed genocide.
MPs could be heard shouting “genocide” in the Commons chamber as David Lammy announced the government was suspending its trade negotiations with Israel and summoning Tzipi Hotovely, Israel’s ambassador to the UK, to the Foreign Office.
The UK has also sanctioned a number of individuals and groups in the West Bank which it says have been linked with acts of violence against Palestinians – including Daniella Weiss, a leading settler activist who was the subject of Louis Theroux’s recent documentary The Settlers.
Politics latest: Starmer says sorry for being ‘overly rude’ at PMQs
Israel immediately criticised the UK government actions as “regrettable” and said the free trade agreement talks, which ministers have now backed out of, were “not being advanced at all by the UK government”.
Oren Marmorstein, a spokesperson for the Israeli foreign affairs ministry, said: “If, due to anti-Israel obsession and domestic political considerations, the British government is willing to harm the British economy – that is its own prerogative.”
Mr Lammy’s intervention came in response to Israel ramping up its latest military offensive in Gaza and its decision to limit the amount of aid into the enclave.
Tom Fletcher, head of the UN Office for the Coordination of Humanitarian Affairs, accused Israel of “deliberately and unashamedly” imposing inhumane conditions on Palestinians by blocking aid from entering Gaza more than 10 weeks ago.
He also told the UN’s security council last week that it must “act now” to “prevent genocide” – a claim that Israel has vehemently denied.
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Aftermath of strike on Gaza school-turned-shelter
Speaking in the Commons, the foreign secretary said the threat of starvation was “hanging over hundreds of thousands of civilians” and that the 11-week blockade stopping humanitarian aid reaching Gaza was “indefensible and cruel”.
Israeli Prime Minister Benjamin Netanyahu has agreed to allow a limited amount of aid into the besieged enclave in response to global concern at reports of famine.
Mr Lammy said Mr Netanyahu’s govenrment was “isolating Israel from its friends and partners around the world, undermining the interests of the Israeli people and damaging the image of the state of Israel in the eyes of the world”.
“We are now entering a dark new phase in this conflict,” Mr Lammy added.
“Netanyahu’s government is planning to drive Gazans from their homes into a corner of the strip to the south and permit them a fraction of the aid that they need.”
Referring to one of the far-right ministers in Mr Netanyahu’s government, he said Bezalel Smotrich “even spoke of Israeli forces cleansing Gaza, destroying what’s left of residents, Palestinians being relocated, he said, to third countries”.
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Surgeon compares Gaza to ‘killing fields’
MPs from across the house shouted “genocide” as Mr Lammy said: “We must call this what it is. It is extremism. It is dangerous. It is repellent. It is monstrous and I condemn it in the strongest possible terms.”
In the Commons, a number of Labour MPs urged the government to go further against Israel.
Yasmin Qureshi, the Labour MP for Bolton South and Walkden, said there needed to be a “full arms embargo” and said: “Can I ask the foreign secretary what additional steps he’s going to be taking in order to stave off this genocide?”
Another Labour MP told Sky News that while the statement was “better than previously…without a concrete timeline and a sanctioning of responsible ministers, it’s hard to know what tangible difference it will make.”
Read more:
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Gaza at mercy of what comes next – analysis
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Israeli officials have said its plans to seize all of Gaza and hold it indefinitely. – which would move the civilian population southward – will help it achieve its aim of defeating Hamas.
Israel also believes the offensive will prevent Hamas from looting and distributing humanitarian aid, which it says strengthens the group’s rule in Gaza.
Mr Netanyahu has defended Israel’s actions in Gaza and reacted angrily to a joint statement penned by the leaders of the UK, France and Canada, in which they urged Israel to end its military offensive in Gaza and lift restrictions on humanitarian aid allowed into the enclave.
The Israeli prime minister said: “By asking Israel to end a defensive war for our survival before Hamas terrorists on our border are destroyed and by demanding a Palestinian state, the leaders in London, Ottawa and Paris are offering a huge prize for the genocidal attack on Israel on October 7 while inviting more such atrocities.
“No nation can be expected to accept anything less and Israel certainly won’t. This is a war of civilisation over barbarism. Israel will continue to defend itself by just means until total victory is achieved.”
US Securities and Exchange Commission (SEC) Paul Atkins appeared before lawmakers in one of his first hearings since becoming chair of the financial regulator, addressing questions about his plans for the cryptocurrency industry.
In a May 20 hearing discussing oversight of the SEC, Atkins reiterated his pledge to make regulating digital assets a “key priority” while chair. In response to questions from North Carolina Representative Chuck Edwards, the SEC chair did not directly answer how much of the regulator’s funds were used to support the crypto task force headed by Commissioner Hester Peirce, and said its findings were “still under development.”
“We should be having something here in the next few months with proposed steps forward,” said Atkins in response to the task force’s first report.
The SEC chair’s appearance at the oversight hearing was one of his first since being sworn into office in April. Nominated by Donald Trump, Atkins, also a former commissioner, was seen by many lawmakers and those in the digital asset industry as someone who could radically change the SEC’s approach to crypto.
Looking to Congress for help with regulatory clarity
Atkins’ remarks came less than 24 hours after US Senators voted to move forward on consideration of a bill to regulate stablecoins, the Guiding and Establishing National Innovation for US Stablecoins Act, or GENIUS Act. The bill is one of many related to aspects of digital assets that could affect how the SEC regulates the industry alongside agencies like the Commodity Futures Trading Commission (CFTC).
“Whatever happens in Congress […] that will help undergird what we do,” said Atkins.
Related: Paul Atkins: ‘Crypto markets have been languishing in SEC limbo’
Since being sworn into office in April, the SEC chair has given opening remarks and overseen the commission’s roundtable events on digital assets. The next event, scheduled for June 9, will have SEC commissioners and industry leaders discuss issues related to decentralized finance.
Magazine: SEC’s U-turn on crypto leaves key questions unanswered
Politics
Suspension of trade talks a political signal that Israeli leadership is increasingly isolated
The UK has suspended trade talks with Israel, in protest at what David Lammy called the “intolerable” conditions in Gaza, which he said would leave the population at risk of starvation.
This is, the foreign office confirms, a UK first, in suspending trade talks for a political or humanitarian reason. The Israeli ambassador in London, Tzipi Hotovely, will be summoned to the Foreign Office to deliver the message.
Politics live: PM apologises for being ‘overly rude’ at PMQs
This suspension, with immediate effect, is a political signal that the Israeli leadership is increasingly isolated even among its allies; and intended to ratchet up the pressure to let aid in.
It comes with a step change in the UK’s language on the humanitarian situation.
Keir Starmer on Monday night, in his joint statement with French President Emmanuel Macron and Canadian Prime Minister Mark Carney, said there would be “concrete steps” if food and medicine continued to be held up at borders; and this is one of the levers available.
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Doctors in Gaza plead for help
David Lammy, announcing the move and targeted sanctions against West Bank settlers linked to violence, called it a “dark phase” in the conflict and said: “[Benjamin] Netanyahu’s actions have made this necessary.”
Trade talks were launched under Rishi Sunak’s government, and a 2030 Roadmap was agreed for boosting trade.
Gaza live: UK halts trade talks with Israel
But although the Labour government committed to continuing with it, the last round of talks was held more than a year ago.
Israel has, the UN say, not allowed trucks in for 11 weeks, after saying Hamas steal the aid intended for civilians. Some trucks entered on Tuesday, but aid agencies say it is nowhere near enough.
With the collapse of the latest talks between the two sides in Qatar last week, the ceasefire the UK is calling for looks far off.
Using economic measures to force the aid issue is likely to be a signal to other allies, including the European Union, to take similar steps.
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