Tag Archives: Rachel Reeves

Will the Chancellor’s ‘securonomics’ strategy drive growth in a new age of instability?

Throughout her time as Chancellor, Rachel Reeves has insisted that the government’s main objective is to facilitate economic growth. During her Mais Lecture on 17 March 2026, Reeves set out a vision for long-term economic growth, using the speech as an opportunity to highlight the ways in which the government will overcome challenges such as fiscal constraints, low productivity, and global instability.

Reeves reaffirmed her belief in ‘securonomics’, an economic strategy where the government helps individuals and businesses gain economic security by investing strategically in sectors like technology, financial services, science and infrastructure. Reeves emphasised that the government needed to play a more active role in guiding investment given the impact of the middle east conflict on the global economy. She stated that market disruptions caused by the COVID-19 pandemic, the Ukraine-Russia war, and the US-Israel war with Iran meant that ‘globalisation, as we once knew it, is dead’. As a result, the government would need to find balance between building resilient public services and facilitating private sector growth, as well as a balance between importing goods and products from other countries and bolstering domestic supply chains.

A central theme of the lecture was the ‘big choices’ the government is making to shape the UK economy over the next decade. The Chancellor placed significant emphasis on securing closer ties with the EU, arguing that it was essential for future growth. She stated that a closer alignment could reduce trade barriers. Reeves acknowledged that Brexit has had a negative impact on the UK economy, a shift from previous years where she had shied away from being overtly critical of Brexit. Reeves stopped short of expressing support for rejoining the EU, instead stating that the UK could find greater alignment with Brussels on policy, while still operating outside the EU’s formal structures. If the government is successful in forming a closer relationship with the EU, she remarked, it could ease the administrative and customs costs for businesses importing from and exporting to the European Union.

While business owners will be pleased to see the Chancellor discussing reducing trade barriers with the EU, Reeves’ attempt to set out a vision for regulatory alignment with the EU may be more concerning for businesses. Reeves said that the government would be prepared to align with EU regulation where it is in the ‘national interest’ to do so, and would maintain regulatory autonomy in sectors with strategic importance for the UK. However, this ignores the post-Brexit reality – the UK and the EU are growing apart on their regulatory goals.

Recent UK governments have increasingly highlighted their ability to implement more flexible approaches to regulation than the EU as a selling point to attract global business. Reeves herself wrote to 17 regulatory bodies in January 2025 urging them to ‘tear down regulatory barriers’ and focus on opportunities to facilitate economic growth. For example, Reeves has implored the Financial Conduct Authority to reduce ‘anti-risk’ regulations and improve competitiveness in financial services sub-sectors, including consumer finance. This is a significant contrast from the EU’s approach, which is more precautionary and is unlikely to result in the reduction of detailed consumer protection rules. If the government does pursue regulatory alignment with the EU in financial services, it would need to consider the impact on regulations, such as affordability assessments and disclosure requirements. Altering these regulations could increase compliance costs for businesses and would likely upset management teams that have spent the last five years adapting to the UK’s Consumer Duty.

The Chancellor also argued that technological advancement is critical to boosting productivity, creating jobs, and positioning the UK as a global leader in emerging industries. As part of this plan, Reeves said the government will support regional growth through fiscal devolution that will empower local leaders, and will also create sector hubs in different cities. This includes establishing Leeds’ Northern Square Mile as a destination for global financial services. To support regional growth the government will create new city-level investment funds and allow regions to retain more of the tax revenues they generate, with the aim of stimulating local investment and reducing reliance on central government.

Reeves commitment to supporting technological innovation in financial services, as well as facilitating growth across the country is likely to provide opportunities to businesses in emerging financial services sub-sectors that harness AI and machine learning. Tech-focused sub-sectors, such as embedded finance, could benefit from these plans, including businesses providing payments and money transfers services, peer-to-peer lending services, and insurtech services. Investors focused on these sectors should monitor the government’s progress in establishing finance or technology sector hubs in various cities across the UK, as well as any funding announcements relating to these sectors.

The Mais Lecture reinforced a consistent economic strategy centred on stability, investment, and reform. While the lecture did not introduce any new policies, it did clarify the government’s long-term economic goals and Reeves’ commitment to ‘securonomics’. However, Reeves will need to use the coming months to share further details on the extent to which she wants key sectors within the government’s industrial strategy, such as the financial services and technology sectors, to be aligned with the EU on regulation. The Chancellor is ‘optimistic’ about the government’s ability to drive investment and growth but will need support from the business community to do so. Investors and businesses should consider potential scenarios where they can support the government to ensure that policy, funding and regulation is geared towards creating the best possible environment for growth in the UK.

If you would like to discuss the Chancellor’s growth strategy and its impact on businesses in more detail, please get in touch with joshua@gkstrategy.com.

Key Takeaways from the Spending Review: A future that is less generous than the past

GK had the pleasure of hosting former Treasury and education minister David Laws and the Financial Times’ Economics Commentator Chris Giles in our latest webinar on Thursday (12th June) to discuss the winners and losers from the government’s spending review, and what it means for business.

The spending review is a significant moment in the political calendar. The settlements it confirms set departmental day-to-day budgets for the next three years (2026-27, 2027-28 and 2028-29) and capital expenditure for the next four (until 2029-30). It is also the moment when No.10 and the Treasury must publicly commit the funds to support their political objectives – in essence, we get to see where spending is going to be prioritised and where it is not.

In the webinar, David and Chris detailed what the spending review means for overall public spending, where the government could come undone, and the possibility of future tax rises. You can read a summary of their key takeaways below:

The spending review is not about making new money available or introducing new taxes.

Spending reviews are all about the allocation of a pre-determined spending envelope which, in this instance, the Chancellor set out in the October budget last year. It does not introduce any new taxes or make new money available. Instead, it confirms what areas of public spending the government wants to prioritise, and which departments will have to be squeezed.

The departmental settlements do not represent a return to the austerity years.

While the overall spending envelope is tight – especially given growing pressure on public spending across health, pensions and defence – day-to-day spending is still rising by 1.2% per year in real terms (i.e. accounting for inflation) over the spending review period. This means it is broadly in line with the departmental spending settlements put forward by various governments since 2019.

A lot of the spending assumptions depend on public sector productivity improving, which is no guarantee.

Public sector productivity has declined since the Covid-19 pandemic and in 2024 it fell by 0.3%. The Office for Budget Responsibility (OBR) has historically assumed quite generous improvements in public sector productivity each year which is a key component of its overall economic growth metric.

If the OBR significantly revises down its assumptions about improvements in productivity, this could seriously impact the funds it is projecting the government will have to work with over the spending review period. This increases the likelihood of the government having to do introduce large tax rises at the autumn budget.

Defence will continue to put pressure on the government’s overall spending envelope.

Since the end of the Second World War, successive governments have used cuts to defence as a means of boosting other areas of public spending, most notably health. Persistent global instability and geopolitical uncertainty means that higher levels of defence spending are likely to continue for the foreseeable future. No.10 and the Treasury will have to contend with this new spending pressure as demographic challenges continue to pile up and economic growth remains sluggish.

The NHS is the big winner from the spending review, albeit with a smaller settlement than it has historically received.

Health secretary Wes Streeting will undoubtedly be the happiest around the Cabinet table following the confirmation of the Department of Health and Social Care’s settlement, with spending on the NHS set to grow by 3% per year in real terms. However, this is below historic average rises of approximately 4-5%. With a growing elderly population and people living with complex conditions for longer, the funding put forward in the spending review settlement is unlikely to significantly move the dial on the performance of the NHS.

Small tax rises are likely at the autumn budget to meet the Chancellor’s fiscal rules.

The government has committed to meet day-to-day expenditure through its own revenues by 2029-30. This means its current budget will have to be in balance or surplus by the end of the decade, and any money the government does borrow will be to invest. If the OBR projects that the government is not on course to meet this fiscal rule (or any of its others), then Chancellor Rachel Reeves will be forced to come back for a second round of tax rises or decide to break a fiscal rule. Either look fairly unpalatable to the government given where they currently are in the opinion polls.

A cabinet reshuffle should be expected in the second half of 2026 as the government begins to ramp up to the next general election.

2026 is projected to a big election year in the UK. Elections are due to take place for the Scottish Parliament and Welsh Assembly, along with a series of newly created unitary authorities. Should the results prove poor for Labour, as current polling indicates they will, then Prime Minister Keir Starmer is likely to reshuffle his cabinet to get his top team in place as the No.10 machine starts to think about the next general election in 2029.