Chancellor Rachel Reeves said on Wednesday that "economic growth is the number one mission of this government" as she unveiled a series of proposals to boost the UK's economy. But just how quickly could these plans deliver tangible growth?
Critics argue that some of the projects, including the proposed Heathrow expansion, are unlikely to give the economy a near-term lift. Meanwhile, BBC Verify has looked into the government’s big pledges to separate the facts from the hype.
How slow is the UK's growth?
Official figures reveal virtually no growth in the UK’s GDP between the July 2024 election and November 2024. The Office for Budget Responsibility (the government’s official forecaster) projects medium-term growth of 1.6% GDP by 2029, well below the pre-2008 financial crisis average of 2.8% a year. However, the International Monetary Fund predicts that UK growth in 2025 and 2026 will surpass that of France and Germany.
A slower GDP growth rate filters down to lower wage and income growth, meaning day-to-day living standards would be slower to improve.
Heathrow expansion
The chancellor said that allowing Heathrow to build a third runway would "create 100,000 jobs", boost investment and exports, and "unlock futher growth". She cited a report by the consultancy Frontier Economics suggesting such an expansion could lift the UK’s potential GDP by 0.43% (about £17bn) by 2050. That aligns with findings from Sir Howard Davies’ 2015 independent commission, which concluded a third runway could increase GDP by 0.65-0.75% by 2050.
Despite this, most analysts agree it could be years before a new runway begins construction, even with reforms to speed up planning permission. And in the longer term, the government would need to balance expanding Heathrow with meeting its climate goals.
When BBC Verify asked the Treasury to clarify the 100,000 jobs figure, it highlighted a 2017 Department for Transport report which found a new Heathrow runway could generate 57,000 to 114,000 additional local jobs. However, that same report noted that "these jobs are not additional at the national level, as some jobs may have been displaced from other airports or other sectors."
Oxford-Cambridge Growth Corridor
In her speech, the chancellor claimed an Oxford and Cambridge Growth Corridor "could add up to £78bn to the UK economy by 2035". This plan resurrects a former proposal to link these two university and research powerhouses through better transport and expansion.
According to an industry group called the Oxford-Cambridge Supercluster—cited by the Treasury—£78bn is the cumulative total over 10 years, not the boost to a single year’s economy. The group’s research suggests that by 2035, the corridor could add £25bn a year in Gross Value Added (GVA), roughly amounting to a permanent 1% boost to GDP.
Though estimates like this are always sensitive to researchers’ assumptions about what might have happened otherwise, most economists agree that infrastructure projects enabling already productive areas to grow further do tend to raise overall economic growth in the long run. Ben Caswell, a senior economist at The National Institute of Economic and Social Research (Niesr), said: "Big infrastructure projects typically deliver growth over the long term, approximately 10 to 20 years."
He explained that while there might be a small short-term demand boost when construction begins, "nothing so significant that you would see it in headline GDP growth figures. However, after the project is complete, the supply capacity of the economy is permanently enhanced, and, all other things equal, that delivers higher sustained GDP growth than would have otherwise been."
Pensions reform
Another of the chancellor’s pro-growth measures aims to let UK companies tap into surplus funds from their "defined benefit pension" schemes. These guarantee an annual pension to retired workers based on their previous salaries and have recently moved into surplus—meaning they hold more assets than they need to pay out.
The Treasury says around 75% of such schemes are now in surplus, collectively totalling £160bn. Chancellor Rachel Reeves wants legislation so firms can invest these funds while still safeguarding retirees’ pensions. However, the Pension Regulator notes the estimated surplus can vary sharply, putting it as high as £207bn on one measure and closer to £137bn on another.
If companies do decide to invest these surpluses, UK business investment could receive a boost—potentially a major plus for economic growth. In 2023, total business investment was £258bn. Yet there’s uncertainty over how many firms will actually opt to channel this money into growth rather than, for instance, offload their pension obligations to insurance companies.
Regardless, the government insists its new proposals will help invigorate the UK’s long-term economic prospects. The big question is how soon—and how much—these measures will truly deliver.
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