Chancellor Rachel Reeves has announced a radical plan to rebalance the UK economy, including devolving tax revenues to English regions, forging closer ties with Europe, and boosting artificial intelligence investment. In the Mais lecture at Bayes Business School, Reeves said Brexit may have cost up to 8% of UK GDP and admitted the student loan system is 'broken'.
Reeves promised 'a genuine break with the past', shifting spending power away from Westminster to address what she called 'the most politically centralised of advanced democracies' and 'one of the most geographically unequal'. Treasury officials will bring forward a plan at the autumn budget to allow regional leaders to receive a share of national taxes, starting with income tax.
She also announced £2.3bn in new city investment funds for England's metro mayors to spend on long-term projects, and said they would retain future business rates revenue. Reeves argued that innovation, AI, closer European ties, and regional growth offer the biggest opportunities for the UK economy.
The chancellor announced the creation of an AI Economic Institute to identify opportunities, and said: 'This government believes a deeper relationship is in the interest of the whole of Europe.' The TUC urged 'relentless ambition' in strengthening EU ties, calling the Conservatives' Brexit deal 'botched'.
However, a Guardian investigation found that the government's AI drive is riddled with 'phantom investments' and slow progress. David Shepherd of Ivanti stressed the need for widespread upskilling and AI literacy programmes to ensure the workforce can leverage AI effectively.
