Keir Starmer insists economy is 'beginning to turn around' as he bids to rescue UK's stuttering finances
28 January 2025, 12:56 | Updated: 28 January 2025, 13:16
Keir Starmer has insisted that the economy is 'beginning to turn around', and that growth remains his government's number one priority at a meeting with senior executives this morning.
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Sir Keir Starmer again insisted growth is his government's main priority at a meeting with CEOs of Britain's largest companies on Tuesday.
He said the country is beginning to see the economy 'turning around', despite increased pressure on his government amid a largely flat economy.
The prime minister vowed to "hard wire growth into all decisions in the cabinet," and hinted at his support for a Heathrow expansions as he vowed to "hard wire growth into all decisions in the cabinet".
Sir Keir Starmer and Rachel Reeves met with the executives as part of their quest for economic growth, as the Chancellor is expected to give a major pro-growth speech tomorrow.
"We have to get our economy working. I think we’re beginning to see how that’s turning around," Starmer told Bloomberg.
"The number one priority of this Labour government is growth: growth, growth, growth."
The meeting was attended by bosses from businesses including Tesco, BT, Unilever, Nationwide, BAE Systems and Lloyds Bank.
Starmer has also hinted at his support for expanding Heathrow Airport with a third runway, amid a huge row within government on the plan.
The Prime Minister refused to confirm the widely expected announcement on support for the expansion but said his Government would back pro-growth policies.
Asked if he was choosing growth over net zero commitments, Sir Keir told broadcasters: "I'm not going to speculate about Heathrow and any decision there.
"What I will say is that growth is the number one priority, wealth creation, making sure that people are better off.
"Of course, we also have climate commitments but growth is really important too."
Starmed also told the meeting of changes to cabinet decisions, saying all policies must prove their contribution to growth before getting approved.
Read more: Rachel Reeves says mission for growth is a higher priority than Labour's net zero goals
“Everything has to be seen through the question of whether it is pro-growth,” Starmer told business executives on Tuesday morning.
Downing Street confirmed that in future all cabinet ministers would have to “set out the growth credentials of new policies in order to get approval from their cabinet colleagues”.
On the same day, Government has also announced a 'global growth team' of 32 mostly Labour ministers and peers, to serve as international trade envoys tasked with unlocking new markets.
Business secretary Jonathan Reynolds said they would “use their experience, expertise and knowledge to unlock new markets around the world for British businesses, drumming up investment into the UK and ultimately driving economic growth”.
The prime minister and chancellor are trying to convince businesses that they are committed to helping the private sector thrive as they attempt to attract more investment to the UK.
One of their plans is to unlock part of the £160bn of surplus pension funds held in corporate defined-benefit pension schemes by easing the rules on how businesses are allowed to manage and invest their pension funds.
According to government estimates, around 3,750 corporate defined-benefit pension schemes - around 75% - are in surplus, holding £160bn more than the pension payments they owe their members when they retire.
Reeves’ first six months in government have been turbulent, with less than impressive growth numbers, an increase in the cost of government borrowing and controversial decisions seeing some call for her to be sacked.
And with potential tariffs from the Trump administration looming, the government has been seeking growth opportunities everywhere, mostly through attracting private investment
Ahead of the meeting, Sir Keir said: "To achieve the change our country needs requires nothing short of rewiring the economy.
"It needs creative reform, the removal of hurdles and unrelenting focus. Whether it's how public services are run, regulation or pension rules, my Government will not accept the status quo."
Reeves said businesses and Government were "united on growth being the top priority", adding that she was "fighting every day to tear down the biggest barriers to growth, taking on regulators, planning processes and opposition to this urgent mission".
Read more: Reeves ‘absolutely happy’ to consider joining EU customs group
Tuesday's meeting follows a difficult period for the government, which has seen stuttering growth figures and rising borrowing costs threaten its plans for improving public services.
At the same time, businesses have expressed increasing pessimism about their prospects for the coming year, including in light of the Budget that increased employers' national insurance contributions - an outlook both Starmer and Reeves will be keen to address with business leaders.
The Chancellor has planned a major speech on Wednesday, which is expected to focus on growth, including further reforms to the planning system, deregulation and boosting trade and investment.
But she is also likely to face questions over the Government's policy on building a third runway at Heathrow Airport, something several Cabinet members have previously spoken out against but which the plan's backers have argued would boost growth.
Read more: Heathrow expansion ‘won’t go ahead’ if it breaks net zero targets, Ed Miliband says
George Monbiot says it's time for a 'frequent flyer tax', not a third Heathrow runway
The third runway was the only point of dissent during the Chancellor's appearance at the Parliamentary Labour Party's weekly meeting on Monday, according to her spokesman, with MPs otherwise expressing "overwhelming support" for her.
During the meeting, the Chancellor told Labour MPs the Government needed to go "further and faster" on growth and "must start saying 'yes'" to major projects.
Rachel Reeves insisted this week that the need for economic growth in the UK "trumped other things" - including Net Zero goals.
The Chancellor is widely expected to greenlight plans to build the runway at Heathrow, as well as expansions at Gatwick and Luton in an attempt to boost growth.
Energy secretary Ed Miliband said the expansion 'won't go ahead' if it breaks the government's legally binding Net Zero targets, highlighting that all ministers are bound by these targets.
“Any aviation expansion must be justified within carbon budgets, and if it can’t be justified, it won’t go ahead," Miliband said.
