Ahead of next month’s budget, I am confident that the foundations of Britain’s economy remain strong. Since the election, we have seen interest rates cut five times, three trade deals struck with some of the world’s biggest economies and wages rising faster than inflation. Tens of billions of pounds of investment has been secured, with business after business choosing Britain as a beacon of economic stability and success in a more dangerous world.
You never hear those on the right of British politics championing these successes. They are determined to talk of an economy that is broken because that is the only way their politics can breathe. They talk of a Britain that is in a permanent state of decline because that is the height of their ambitions for it. I reject both claims.
I am ambitious for our country because I believe a better future is in our reach and I believe in the promise of change that this Labour government was elected on 14 months ago. But I also accept that our country and our economy continue to face challenges.
I don’t need a spreadsheet to tell me that too many working people in Britain feel the economy is unfair and does not work for them, with the cost of living still bearing down on family budgets. I don’t need a graph to tell me that the world has become a more dangerous and uncertain place, pushing up the cost of borrowing for countries across the world. And no one needs to be told that the economy has not been as productive as it could have been over the past 14 years.
There has been lots of speculation in the media over the past few days and weeks about the conclusions that the Office for Budget Responsibility will reach about the UK’s long-term productivity. Those conclusions will be delivered at the budget next month and I am not going to pre-empt them. But I am going to be candid now that the productivity performance we inherited from the previous Conservative government and since the financial crisis has been too weak.
Austerity, a chaotic Brexit and the pandemic have left deep scars on the British economy that are still being felt today. But the task facing our country – facing me as chancellor – is not to relitigate the past or let past mistakes determine our future. I am determined that we don’t simply accept the forecasts but we defy them, as we already have this year. To do so means taking the necessary choices today, including at the budget next month.
That means there can be no return to austerity. It was the failed austerity policies of the Conservatives – which are being propounded once again by the party’s current leadership – that choked investment, racked up debt and left hospital waiting lists soaring. If productivity is our challenge, then investment is our solution. Investment in our National Health Service to cut hospital waiting lists. Investment in our national infrastructure – from roads and rail to energy and defence – to get Britain building again and create jobs in all parts of the country. And investment in our economy so we can kickstart growth.
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Investment is an essential part of our economic strategy, but it cannot come at the cost of economic responsibility. I will not repeat the mistakes made by Liz Truss three years ago when spending got out of control and markets lost confidence. I will keep my promise to the British people to keep a grip on the country’s finances and to pay off our country’s debt because there is nothing progressive about a Labour government using nearly £1 in every £10 of public money it spends on financing debt interest.
And alongside investment we will take the long-term decisions that are in the best interests of our country and opposed by our political opponents. From building a closer relationship with the European Union and securing new trade deals with our friends and allies to fixing our broken planning system so we can build the homes for the next generation to own.
These decisions – and the decisions I will take at the budget – don’t come for free and they are not easy, but they are the right, fair and necessary choices. This is how we will turn our backs on decline and build a better future for tomorrow.
Rachel Reeves is chancellor of the exchequer
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