Reeves Pledges To Address UK Productivity Gap In Autumn Budget

Chancellor Rachel Reeves has said the autumn budget will focus on tackling the UK’s productivity challenge through targeted investment in infrastructure and reforms to the planning system.

In an editorial for The Guardian, Ms Reeves wrote: “If renewal is our mission and productivity is our challenge, then investment and reform are our tools.”

Government plans include reducing red tape and transferring some planning responsibilities from councillors to specialist officers, measures outlined in the Planning and Infrastructure Bill currently before the House of Lords.

Ms Reeves said Labour’s second year in power will be focused on “building a stronger economy for a renewed Britain” and called for an approach that ensures working people see the benefits of their efforts. She wrote: “Working people across Britain are striving and grafting, but they haven’t had the tools they need for the job. They have not seen their incomes rise as a reward for their hard work.

“There is that sinking feeling that families and businesses across the country feel at the end of every month that they are working hard, but getting nowhere.

“There is nothing progressive – nothing Labour – about an economy that is not productive and does not reward those who contribute.

“Since I became shadow chancellor and then Chancellor, I have known that breaking this cycle will require our sustained effort across many fronts.”

She added that any decisions on tax increases will be presented in a “responsible manner” in the budget, despite speculation about her plans.

The commitment comes ahead of new GDP data, which follows a 0.3 per cent fall in April, the largest monthly contraction since October 2023. The decline was driven by a sharp drop in manufacturing output and a record fall in exports to the US after tariff increases by President Donald Trump.

Figures from the Office for National Statistics show productivity in the first quarter of 2025 was 0.2 per cent lower than the same period in 2024. In July, Cabinet ministers were instructed to prioritise productivity gains when awarding government contracts, with a focus on boosting British industry, jobs and skills.