Rachel Reeves told an audience of financial and business leaders that she had “earned credibility” as chancellor and had laid the foundations for Andy Burnham to grow the economy.
Delivering her third, and probably final, Mansion House Speech in the City of London, Ms Reeves set out her record on creating stability and paving the way for investment and closer ties with the European Union.
“This government has shown that change, indeed radical change, is possible…and the record of the last two years makes clear that governments can achieve that change only when they combine radicalism with credibility,” she said.
“I had to earn that credibility in opposition, and I have proven it in government in every action that I have taken since I became Chancellor.”
Her critics will accuse her of re-writing the past two years and ignoring the collapse in business confidence, rising company failures and unemployment, particularly among the young, as well as undermining both the hospitality and oil & gas industries.
During her speech, Ms Reeves made no admissions of failure, nor any concessions to change any policy decision.
She made no reference to the much-maligned decision to increase employers’ national insurance contributions or the increase in capital gains tax on entrepreneurs selling their business.
“I’m proud to report that the British economy is strong,” she declared, backing up her statement with figures, stating that Britain had the fastest growth in the G7, with productivity and wages both rising.
“If I had said two years ago that this is where we would be today, people would have doubted it, but we have proven the doubters wrong,” she said. “Through strength, resilience and determination, Britain has beaten the odds once again.”
She said she had built stability on an approach called securonomics – an investment-led growth model for Britain.
“I am optimistic about our country’s potential, the economic future that is within our grasp,” she declared.
In a message seeming to reference Mr Burnham’s devolution plans, she said the next phase would involve “building growth in every part of our country, breaking with the failed idea that prosperity can be built from only a few narrow parts of Britain.”
A second thread would be a concerted drive to make sure the jobs, industries and innovations of the future are built here in Britain, and the third would be “confronting head-on the damage done by Brexit by building much deeper ties with our largest and closest trading partner – the European Union.”
She added: “I have always been clear about the damage that Brexit did to our economy. Britain’s future is inescapably bound with that of Europe, our largest trading partner, with whom we share common interests and common values.
“We have already made significant progress: participation in Horizon Europe is supporting the development of cutting-edge technology. We are set to rejoin the EU’s Erasmus scheme next year and yesterday the PM announced an agreement on the UK’s participation in the EU’s €90bn loan to Ukraine which will strengthen our defence links and our defence industrial base.”
She added: “I want to see the next UK-EU summit rescheduled as soon as possible so that we can finalise ambitious agreements on agrifoods, emissions trading, electricity and a Youth Experience Scheme.”
CBI chief executive Rain Newton-Smith said the Chancellor had “struck the right tone” by reassuring financial markets, global investors and businesses of the UK’s commitment to investment, innovation and growth.
“The priority now is to continue the translation of those reforms into practical changes that strengthen the financial services sector and support firms across the wider economy that rely on it.
“The recently announced package to support SMEs was welcome and will help more businesses to scale, export and adopt new technologies here in the UK. That investment should pay dividends by boosting productivity, strengthening local economies and supporting long-term growth.
“The next step is delivery across key reform programmes, including reform of the Financial Ombudsman Service, pensions reform and streamlining the Senior Managers and Certification Regime.
“The key measure of success will be whether these changes can unlock further domestic investment, help ambitious firms to scale and grow, deepen UK capital markets and make regulation clearer, faster and more predictable.”
Kate Shoesmith, policy director at the British Chambers of Commerce, said: “There were clear themes in tonight’s speech by the Chancellor that businesses will hope are carried on by Andy Burnham’s new administration.
“Over the last two years, the Chancellor has supported important steps in the right direction. Her clear ambition to build a closer trading relationship with the EU is also something that will resonate with many firms.
“Reducing barriers with our largest trading partner can lower costs, boost export opportunities and support growth for firms of all sizes.
“The commitment to further devolution is also encouraging. Business leaders on the ground understand the strengths and challenges of their local economies, so any transfer of powers must be accompanied by meaningful engagement with the Chamber Network.
“It remains rooted in communities and connected to firms in every region and nation. “
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