Rachel Reeves need to convince Davos she can get Britain building where others have failed (Image: Kirsty O’Connor / Treasury)
Rachel Reeves must convince international investors in Davos this week that she is not driving the UK economy into a wall.
This is the same challenge she faces with worried UK voters.
The moguls at the Swiss ski resort can see the same danger signs that alarm households throughout Britain.
The unemployment rate has ticked up to 4.4% and there has been the biggest fall in payrolled employees since 2020. It is difficult for the Chancellor to argue that her decision to hit employers with a hike in National Insurance has not made it harder for people to get a job.
When people are anxious about their jobs they cut back on spending. Retail sales went down in December – with the country seeing the lowest food sales for more than a decade.
Ms Reeves is desperate to get investors to pump money into the UK to ignite growth. It is vital the UK is not seen as the land where big projects go to die.
But corporate overlords she will meet in Davos have good reason to doubt that Britain will get building anytime soon.
The HS2 fiasco shows that the UK cannot add urgently need capacity to its rail network without a project spiralling in costs before being brutally truncated. The state of many local lines and the difficulties facing people trying to travel east-west is a national disgrace and a brake on growth.
Likewise, politicians have talked for years about a housing crisis. There is no shortage of demand – couples are desperate to make the biggest investments of their lives – but new homes fail to appear in anything like sufficient numbers.
We cannot even build hospitals to treat our sick. We will have to wait up to 14 years until work starts on hospitals promised by Boris Johnson.
The Treasury is reportedly looking at new runways for Gatwick and Heathrow. Gordon Brown’s Government’s gave the thumbs-up to a third runway at Heathrow in 2009 but this is yet another project that has repeatedly failed to get off the ground.
Meanwhile, this month’s turmoil on the markets demonstrated how a slight increase in borrowing costs can now jeopardise the Government’s plans for spending and borrowing.
Investors can see wider problems gripping the country.
Ministers like to boast about the greatness of our universities. But – unlike in the United States – academic brilliance is not coupled with world-changing entrepreneurship.
Why has the UK not birthed companies that can match Microsoft, Apple or Amazon – or innovations on the scale of Facebook, Tiktok
Britain needs a revolution when it comes to grasping growth opportunities and delivering the infrastructure and skills the country requires to prosper. Sir Keir Starmer, Angela Rayner and Ms Reeves want to lead this change and “secure the highest sustained growth in the G7” – but does anyone in Davos or Dudley believe they can achieve this?
Can a Government that unleashes a “tax on jobs” claim to be on the side of workers or a champion of growth?
Everyone at the gathering in Switzerland knows an avalanche of trouble will be heading their way if President Trump unleashes a salvo of tariffs and ignites trade wars with China and the EU.
The Prime Minister and his team will desperately hope that the “special relationship” with the US will allow Britain to be spared a direct pummelling. But the billionaire by the president’s side, Elon Musk, does not hide his antagonism towards Labour.
Ms Reeves will cling to every cause for hope that things can get better. UK pay is rising at its fastest rate for more than three years and a Bank of England interest rate cut next month could take a little pressure off households and businesses.
But it is essential that she stops frightening employers and families. She needs to engineer a massive revival of confidence and ambition to unlock the growth needed to save our public services and time is running out.
