Chancellor Rachel Reeves has announced a major push for fiscal devolution to English regions, alongside a renewed emphasis on artificial intelligence and closer ties with Europe, as part of a strategy to revive UK economic growth. Delivering the annual Mais lecture at Bayes Business School in London, Reeves said the Treasury would draw up proposals to give England's metro mayors a share of national tax revenues, starting with income tax, in what she called “a genuine break with the past”.
Reeves also revealed £2.3bn in new city investment funds for regional mayors to spend on long-term projects, and confirmed they would be able to retain future business rates revenue. She argued that the UK is “the most politically centralised of advanced democracies, and one of the most geographically unequal”, and that shifting spending power away from Westminster was essential to rebalance the economy.
In a wide-ranging speech, the chancellor cited research suggesting Brexit may have cost up to 8% of UK GDP, saying it had caused damage. She declared: “This government believes a deeper relationship is in the interest of the whole of Europe.” The TUC welcomed the commitment, urging “relentless ambition” in strengthening EU ties, particularly in chemicals, pharmaceuticals and automotive sectors.
Reeves announced the creation of an AI Economic Institute to identify opportunities, arguing that innovation and artificial intelligence offered major growth potential. However, a recent Guardian investigation found that the government's AI drive is riddled with “phantom investments” and slow progress on datacentre projects. David Shepherd of Ivanti stressed the need for widespread upskilling and AI literacy programmes to ensure the workforce can use AI effectively.
The chancellor also acknowledged that the student loan system is “broken”, but said she could not fix it yet, prioritising child poverty, the NHS and defence. Anna Leach of the Institute of Directors welcomed the focus on productivity and investment, calling it vital for growth resilience.
