Tag: Economy

Oxbridge to become Europe’s Silicon Valley?

Chancellor unveils new plans to deliver the Oxford-Cambridge Growth Corridor that will boost the UK economy by up to £78 billion by 2035

  • Rachel Reeves will today vow to go ‘further and faster’ to deliver the government’s Plan for Change to kick start economic growth and put more pounds in people’s pockets.
  • Chancellor to unveil plans to unleash the potential of the Oxford-Cambridge Growth Corridor that will add up to £78 billion to the UK economy according to industry experts, catalysing growth of UK science and technology.
  • Comes after Chancellor last week announced National Wealth Fund and Office for Investment will take new approaches to spur regional growth across the UK.

Chancellor Rachel Reeves will today vow to go “further and faster” to kick start the economy, as she unveils new plans to deliver the Oxford-Cambridge Growth Corridor that will boost the UK economy by up to £78 billion by 2035 according to industry experts.

In a speech in Oxfordshire, the Chancellor will tell regional and business leaders that economic growth is the number one mission of this government and its Plan for Change. She will declare that Britain’s economy has “huge potential” and is at the “forefront of some of the most exciting developments in the world like artificial intelligence and life sciences.”

She will back the redevelopment of Old Trafford and will review the Green Book – the government’s guidance on appraisal – in order to support decisions on public investment across the country, including outside London and the Southeast.

The speech comes after the Chancellor last week announced a new approach for the National Wealth Fund (NWF) and the Office for Investment (OfI) to work with local leaders to build pipelines of incoming investment and projects linked to regional growth priorities. This includes the NWF trialling Strategic Partnerships in Greater Manchester, West Yorkshire, West Midlands, and Glasgow City Region and the OfI piloting an approach in the Liverpool City Region and the North East Combined Authority to connect their regions to central government and industry expertise in order to unlock private investment.

Reeves will say “low growth is not our destiny, but that economic growth will not come without a fight. Without a government that is on the side of working people. Willing to take the right decisions now to change our country’s course for the better.”

The Chancellor is expected to say: “Britain is a country of huge potential. A country of strong communities, with local businesses at their heart.

“We are the forefront of some of the most exciting developments in the world like artificial intelligence and life sciences. We have great companies based here delivering jobs and investment in Britain.

“And we have fundamental strengths – in our history, our language, and our legal system – to compete in a global economy.

“But for too long, that potential has been held back. For too long, we have accepted low expectations, accepted stagnation and accepted the risk of decline. We can do so much better.

“Low growth is not our destiny. But growth will not come without a fight. Without a government that is on the side of working people. Willing to take the right decisions now to change our country’s course for the better.

“That’s what our Plan for Change is about. That is what drives me as Chancellor. And it is what I’m determined to deliver.”

In her speech the Chancellor will announce:

  • The Environment Agency has lifted its objections to a new development around Cambridge that could unlock 4,500 new homes and associated community spaces such as schools and leisure facilities as well as office and laboratory space in Cambridge City Centre. This was only possible as a result of the government working closely with councils and regulators to find creative solutions to unlock growth and address environmental pressures.
  • That the government has agreed for water companies to unlock £7.9bn investment for the next 5 years to improve our water infrastructure and provide a foundation for growth. This includes nine new reservoirs, such as the new Fens Reservoir serving Cambridge and the Abingdon Reservoir near Oxford.
  • Confirming funding towards better transport links in the region including funding for East-West Rail, with new services between Oxford and Milton Keynes this year and upgrading the A428 to reduce journey times between Milton Keynes and Cambridge.
  • Prioritisation of a new Cambridge Cancer Research Hospital as part of the New Hospitals Programme bringing together Cambridge University, Addenbrookes Hospital and Cancer Research UK.
  • Support for the development of new and expanded communities in the Oxford-Cambridge Growth Corridor and a new East Coast Mainline station in Tempsford, to expand the region’s economy.
  • That she welcomes Cambridge University’s proposal for a new large scale innovation hub in the city centre. As the world’s leading science and tech cluster by intensity, Cambridge will play a crucial part in the government’s modern Industrial Strategy.
  • A new Growth Commission for Oxford, inspired by the Cambridge model, to review how best we can unlock and accelerate nationally significant growth for the city and surrounding area.
  • Appointment of Sir Patrick Vallance as Oxford-Cambridge Growth Corridor Champion to provide senior leadership to ensure the Government’s ambitions are delivered. 

The Chancellor is expected to say: “Oxford and Cambridge offer huge economic potential for our nation’s growth prospects.

“Just 66 miles apart these cities are home to two of the best universities in the world two of the most intensive innovation clusters in the world and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI.

“It has the potential to be Europe’s Silicon Valley. The home of British innovation.

“To grow, these world-class companies need world-class talent who should be able to get to work quickly and find somewhere to live in the local area. But to get from Oxford to Cambridge by train takes two and a half hours.

“There is no way to commute directly from towns like Bedford and Milton Keynes to Cambridge by rail. And there is a lack of affordable housing across the region.

“Oxford and Cambridge are two of the least affordable cities in the UK. In other words, the demand is there but there are far too many supply side constraints on economic growth in the region.”

Designed to take advantage of the region’s unique strengths and potential, the announcements are further evidence of the government’s modern Industrial Strategy in action as it seeks to create the right conditions to increase investment in our leading growth sectors like life sciences, artificial intelligence and advanced manufacturing.

She will add: “Taken together, these announcements show that for the first time a government is providing real leadership to deliver this project with a clear strategy for the entire region backed by funding for the housing and infrastructure we so badly need.“

The speech comes after the Chancellor last week announced a package of investment reforms to spur regional growth across the UK.

Rachel Reeves set out a new approach for the National Wealth Fund (NWF) and the Office for Investment (OfI) to work with local leaders to build pipelines of incoming investment and projects linked to regional growth priorities.

Putting local knowledge and leadership at the forefront, there will be tailored strategies for each region to ensure investment matches local needs and drives sustainable growth.

Putting the government’s Plan for Change into action, the Chancellor set out that the goal is to harness growth everywhere to rebuild Britain and usher in a decade of national renewal. Measures included the NWF trialling Strategic Partnerships in Greater Manchester, West Yorkshire, West Midlands, and Glasgow City Region and the OfI piloting an approach in the Liverpool City Region and the North East Combined Authority to connect their regions to central government and industry expertise in order to unlock private investment.

Science Minister, Lord Patrick Vallance said: “The UK has all the ingredients to replicate the success of Silicon Valley or the Boston Cluster but for too long has been constrained by short termism and a lack of direction.

“This government’s Plan for Change will see an end to that defeatism. I look forward to working with local leaders to fulfil the Oxford-Cambridge corridor’s potential by building on its existing strengths in academia, life sciences, semiconductors, AI and green technology amongst others.

“Together we will build the infrastructure and partnerships needed to join up this region’s academia, investors and business so that we can boost growth, deliver innovations and create new jobs that improve all our lives.”

Transport Secretary, Heidi Alexander said: “Well connected communities are a cornerstone for growth. East West Rail will not only provide better links and lasting benefits to Oxford and Cambridge, but to all the surrounding areas.

“I’m also delighted to announce a brand new station at Tempsford, which will be game changing for the region – allowing a new community and businesses to grow, unlocking faster and smoother access to opportunities, and delivering on the Government’s Plan for Change.”

S2G4KH Starling murmuration at RSPB Ham Wall, Avalon Marshes, Somerset

Responding to Rachel Reeves’ speech today on economic growth Roger Mortlock, CPRE countryside charity chief executive, said:

On airport expansion and the Lower Thames Crossing 

‘The single biggest threat to the countryside is climate change. If the government expands Heathrow, Luton, City and Gatwick airports, the increase in carbon emissions will make a mockery of its commitment to reaching net zero by 2030.   

‘Airport expansion will do nothing to boost UK growth. There has been no net increase in air travel for business purposes or in jobs in air transport since 2007. Recent research from the New Economic Foundation indicates that airport expansion will drive significant tourism revenue abroad, not bring it to the UK. To create the jobs of the future we need investment in low-carbon industries and transport, not more unsustainable expansion of the UK’s airports.   

‘CPRE local groups in Bedfordshire, Hertfordshire, London and Sussex have been at the forefront of campaigns to prevent further airport expansion. If implemented, these proposals would have a devastating impact on some of the UK’s most valuable agricultural land, vital wildlife habitats and green spaces close to millions of people’s homes.’

On the Lower Thames Crossing 

‘The proposed Lower Thames Crossing would also drive-up levels of unsustainable travel at a time when funding should be directed into sustainable public transport instead. CPRE Kent has highlighted how the crossing’s environmental and economic impacts on the local area would far outweigh any supposed benefits.’

On zonal planning reforms 

‘We welcome the government’s plan to support the construction of more homes close to existing transport hubs, particularly in our towns and cities. Provided that they are genuinely affordable and built on brownfield land, these homes could help unlock growth by providing sustainable places to live close to where people already live, work and go to school. 

‘Building more homes close to transport hubs must not be allowed to undermine the Green Belt, one of this country’s most successful spatial protections with huge potential to help address the climate and nature emergencies.’   

On the planning regime for Nationally Significant Infrastructure Projects 

‘It’s clear we’ve got to build a clean energy grid fit for the future but the best way to achieve this is with local communities involved from the start.  

‘To speed up the planning system, the government should deliver on its commitment to fund hundreds of new planning officers. 

‘The UK could learn from countries such as Ireland and Australia, which involve communities in decision making from the beginning, reducing the need for lengthy and expensive legal processes without eroding democracy. For everyone’s sake, we should be building consensus, not dismissing people with real ideas and solutions as ‘blockers’.

£3M FUNDING BOOST FOR EDINBURGH’S SMART DATA FOUNDRY

Smart Data Foundry (SDF) has been awarded £3 million funding to operate a new Financial Data Service, enabling more researchers to study the financial health of millions of households across the UK, by providing secure access to financial behaviours, economic resilience, and regional economic activity.

The funding is made by Smart Data Research UK, which is part of UK Research and Innovation (UKRI).

The new service, which will operate from SDF’s base at Edinburgh Futures Institute, will be part of a network of five other data services across the country.

Together, they will put the UK at the forefront of smart data research and innovation. Providing safe and efficient ways for researchers to access and use the smart data generated through everyday interactions with the digital world, including via mobile apps, navigation systems, social media and shopping.

Led by SDF’s Dougie Robb and Professor Chris Dibben from the University of Edinburgh, the new Financial Data Service will provide unprecedented insights into the economic health of the UK through secure access to de-identified banking and finance data from millions of households and businesses.

Since its establishment in 2022, SDF has earned national recognition for its work using anonymised financial data for public good, including research in partnership with NatWest Group into how Covid-19 affected how people earned, spent and saved during and post pandemic and its work with Sage and CEBR on their quarterly SME tracker.

Dougie Robb, SDF’s Interim CEO, said: “We look forward to joining five of the most forward-thinking data service organisations in the UK in this groundbreaking network. It will foster data sharing partnerships between academia, public institutions and private enterprise leading to public good outcomes which will improve the lives of people across the UK.

“In partnership with the University of Edinburgh (UoE) we’ve made great progress in holding and making available for public benefit research financial data resources. We have forged fruitful data partnerships with NatWest Group, Virgin Money, SAGE, and Equifax,  and built a team of transdisciplinary experts with expertise across finance, banking, digital technology, product, data science, and information governance.”

Professor Chris Dibben added: “Understanding the financial situation of households across the UK is a vitally important for social and economic research. However this key aspect of economic life is often poorly measured in our research datasets or even absent.

“This investment by Smart Data Research UK in a Financial Data Service will allow us to change this situation, enabling more public benefit social and economic policy research. I am really excited to be working with Smart Data Foundry and SDR UK to deliver this significant new resource over the next three years.”

By partnering with financial institutions and leading research institutes, the new Financial Data Service will deliver insights into productivity, prosperity and health and wellbeing, providing access to detailed evidence about financial behaviours, economic resilience, and regional economic activity.

This data will enable researchers to tackle urgent policy challenges including the cost-of-living crisis, financial inclusion, the changing nature of employment, and productivity in different economic sectors and geographic places.

The service will enable a transformation in the UK’s understanding of how economic shocks and policy interventions affect different communities, helping policymakers design more targeted and effective responses to economic challenges.

Magdalena Getler, Head of Academic Engagement at Smart Data Foundry, said: “With the new Data (Use and Access) Bill currently going through Parliament, we are at the beginning of a new age for data.

“If successful, the new legislation will empower safe data use, access, and sharing for the good of society like tackling challenges such as the impacts of poverty and economic inactivity.”

Also awarded funding in this latest tranche was Smart Energy Data Service, part of the Energy Systems Catapult. All six will work collaboratively as part of the Smart Data Research UK programme.

These two new data services join four others previously announced:

·       Imagery Data Service (Imago)

·       Smart Data Donation Service

·       Geographic Data Service

·       Healthy and Sustainable Places Data Service

A strategic hub based within the Economic and Social Research Council (ESRC) will provide leadership and coordination. It will also offer common services and ethical guidance.

Joe Cuddeford, Director of Smart Data Research UK, said: “Our six interconnected services will enable researchers to access unprecedented insights across finance, energy, health, geography, and beyond – empowering innovative solutions to complex societal challenges facing the UK today.”

Stian Westlake, Executive Chair of the Economic and Social Research Council, added: “This investment in a new network of smart data services helps put the UK at the forefront of data-driven innovation.

“Data infrastructure is as critical to our shared prosperity as transport, water or power networks. When we invest in data infrastructure we are investing in economic growth, improved public services, and a more sustainable future.”

Ministers to ‘bang the drum for Britain’ at Davos gathering

  • Chancellor and Business Secretary at World Economic Forum’s Annual Meeting in Davos this week
  • Ministers will meet CEOs and investors to bang the drum for British business
  • UK delegation to tell global business leaders and investors that the time to invest in Britain is now
Impressions from the World Economic Forum Annual Meeting 2025 in Davos-Klosters, Switzerland 18 January 2025. Copyright: World Economic Forum/Thibaut Bouvier

Ministers will be banging the drum for Britain at Davos this week, with the most visible UK Government presence in recent years pitching the UK’s investment offer to top business chiefs.

Chancellor Rachel Reeves and Business and Trade Secretary Jonathan Reynolds will meet with leading members of the global business community to encourage them to put their money into the UK and back British business.

They will highlight the UK’s political and economic stability, making us an attractive place to do business. This is backed by an unashamedly pro-business government that is slashing burdensome regulation, launching ambitious planning reform, and leveraging our trade relationships with Europe, America, Asia, the Gulf and beyond to help businesses use Britain as their base to connect with exciting global markets.

The visit will continue to deliver on the government’s number one mission to grow the economy and raise living standards for working people, coming days after the IMF revised their growth forecast for the UK economy upwards for next year.

The government’s Davos attendance also follows a survey from consultancy firm PwC, who on Monday ranked the UK as the second most investible location globally after the U.S. – the first time the UK has secured this position in the 28-year history of the survey.

Impressions from the World Economic Forum Annual Meeting 2025 in Davos-Klosters, Switzerland 18 January 2025. Copyright: World Economic Forum/Thibaut Bouvier

Chancellor of the Exchequer Rachel Reeves said: “Business leaders and investors need to know that the UK is where their businesses will flourish, so I’m meeting them face to face in Davos to make our case.

“We are one of the most exciting places in the world for them to put their money, with a history of innovation, a skilled workforce and a stable government that backs business. I will not rest until the UK economy is growing and this government is delivering on its Plan for Change, so we can put more money in people’s pockets.

“The time to invest in Britain is now.”

The Chancellor will be on the ground at Davos on Wednesday 22 and Thursday 23 January. She and the Business Secretary will speak at a Bloomberg event on Wednesday morning.

She will also speak at the Country Strategic Dialogue alongside Ruth Porat, president and CIO of Google and Julie Sweet, CEO of Accenture, to over 80 global CEOs and business leaders from across tech, financial services and green industries. In the evening the Chancellor will attend the Global Goals dinner.

On Thursday, the Chancellor will take part in a fireside chat with the Wall Street Journal to an audience of business leaders, following which she will speak at an economy roundtable with fellow finance ministers on global issues. The Chancellor will also speak at a lunch hosted by the CBI to an audience of 50 senior executives from UK-based businesses and international investors.

Meetings are planned with a wide range of CEOs and business leaders, including Jamie Dimon, CEO of JP Morgan, Jo Taylor, president of the Ontario Teachers’ Pension Plan, and David Solomon, CEO of Goldman Sachs – amongst others.

The Business and Trade Secretary will have bilateral meetings with many of his international trade counterparts, including Robert Habeck, Vice-Chancellor of Germany, Maros Sefcovic, Executive Vice-President of the European Commission and WTO Director-General Dr Ngozi Okonjo-Iweala.

He will also meet with a range of businesses and investors, including AON; Anglo American; AWS; Carlsberg; Capgemini; Honeywell; RWE; and SABIC.

Impressions from the World Economic Forum Annual Meeting 2025 in Davos-Klosters, Switzerland 18 January 2025. Copyright: World Economic Forum/Thibaut Bouvier

Business and Trade Secretary Jonathan Reynolds said: “Britain is back in business under this government, and our Plan for Change is already delivering for working people.

“The UK is the most connected market on earth, and we will continue to be the home for innovative businesses looking to face outwards to the world. We’ve lifted barriers to investment and secured £63 billion at the International Investment Summit, creating thousands of jobs in the process.

“These investments promise better wages, stronger communities, and better services and I’ll be at Davos to build on this momentum.”

The UK Government’s presence at Davos will also be the most visible in years, with print and out of home marketing promoting the UK’s connectivity, openness and opportunity to coincide with the summit.

Chancellor’s National Wealth Fund ‘fuels 8,600 jobs in six months’

  • 8,600 jobs fuelled across the UK by the Chancellor’s National Wealth Fund since July, with almost £1.6 billion of private investment unlocked, delivering on the Plan for Change.
  • Jobs and investment spread across UK’s growth sectors from clean energy to digital infrastructure, driving government’s number one mission to grow the economy
  • New deal also announced today for North Wales with £92 million committed to support crucial improvements to coastal flood defence barriers protecting business and homes.

Thousands of jobs have been fuelled by the Chancellor’s National Wealth Fund in the last six months, with almost £1.6 billion of investment unlocked, driving growth across all corners of the UK.

The Chancellor began work just days into office to establish a new National Wealth Fund (NWF) that would invest in the new industries of the future to create good jobs and opportunity across every part of the country. With £27.8 billion of firepower, the NWF will help drive the government’s Plan for Change and turbocharge growth across the country to raise living standards in every part of the United Kingdom.

The jobs that have been created will support the digital and clean energy sectors, including 6,500 expected to be created in the retrofit sector across the UK, with the NWF providing a financial guarantee that will see Lloyds and Barclays deliver £1 billion of funding to deliver improvements such as low carbon heating and insulation in social housing.

New figures reveal almost £1.6 billion of private investment has been leveraged into projects across the UK’s clean energy and growth sectors over the past six months. This includes to support faster broadband connections for thousands of businesses and households in Cornwall, Yorkshire, Lincolnshire and Cumbria, fuelling economic growth.

Millions of pounds have also been committed to help West Suffolk Council to decarbonise its buildings and transition its fleet to electric vehicles, alongside supporting the expansion of a successful rooftop solar scheme.

This innovative investment model has the potential to be replicated by other local authorities and means more businesses can benefit from low cost, low carbon electricity, supporting local businesses and the growth of the clean energy sector.

It comes as today, the NWF announces a loan of £92 million to support Denbighshire County Council’s crucial improvements to coastal flood defence barriers in Denbighshire, North Wales, protecting businesses and homes against the devastating impact of flooding, creating jobs and growth in the construction industry.

Chief Secretary to the Treasury Darren Jones said: “Growth is our national mission, and the cornerstone of our Plan for Change that will improve living standards and put more money in people’s pockets.

“And the National Wealth Fund is playing a vital part in delivering economic growth, securing over a billion of private investment since July in industries that turbocharge growth in our economy and create good quality jobs across the UK”.

The Chancellor announced in October how the NWF would drive long-term investment in Britain, working hand in hand with business to create new high skilled jobs right across the UK, helping make people better off.

To mobilise investment at pace, the NWF will expand on the UK Infrastructure Bank’s offer including additional financial instruments so it is more catalytic and will take on more risk to have a greater impact:

  • The NWF has more capital with £27.8 billion – inheriting UKIB’s £22 billion and having an additional £5.8 billion.
  • It has a renewed focus to support the delivery of the wider industrial strategy, and the Government’s clean energy and growth missions. At least £5.8bn of the NWF’s capital will focus on the five sectors announced in the manifesto: green hydrogen, carbon capture, ports, gigafactories and green steel.
  • The NWF will have increased resources and focus on conducting more outreach to identify expanded project pipelines and structure innovative transactions.
    It will have a strong regional mandate to unleash the full potential of our cities and regions.

Chancellor on China: ‘Stable relationship that supports secure growth is in our national interest’

  • Chancellor visiting Beijing for the first UK-China Economic and Financial Dialogue since 2019 – seeking stability in relationship with world’s second largest economy to achieve secure and resilient growth.
  • Visit delivers on commitment to explore deeper economic cooperation made by Prime Minister and President Xi at G20 in November.
  • Reeves will also raise difficult issues, including China’s support for Russia illegal war in Ukraine and concerns over constraints on rights and freedoms in Hong Kong.

Making working people across Britain secure and better off is ‘at the forefront of the Chancellor’s mind’ while in Beijing this weekend for a UK-China Economic and Financial Dialogue (EFD).

Rachel Reeves will meet with her counterpart, Vice Premier He Lifeng, in the Chinese capital today for a series of conversations around the financial services relationship between the two countries, support for safe trade and investment and the importance of cooperation on global issues like climate change.

She will be joined by Bank of England Governor Andrew Bailey, Chief Executive of the Financial Conduct Authority Nikhil Rathi, and senior representatives from some of Britain’s biggest financial services firms as she seeks outcomes that benefit our businesses, support secure and resilient growth in the UK, and finance tackling shared global challenges.

The Chancellor’s visit follows a meeting between Prime Minister Keir Starmer and President Xi Jinping at the G20 Summit last autumn, where they discussed deepening the economic and trade relationship shared by the UK and China, in order to yield mutual benefits, support growth, and have candid discussion on issues where our views differ. As part of this, the Chancellor is expected to raise constraints on rights and freedoms in Hong Kong and to urge China to stop its material and economic support for the Russian war effort in Ukraine.

This is part of the consistent, long term and strategic approach that the government is taking in managing the UK’s relations with China, rooted in UK and global interests. The government will co-operate where it can, compete where it needs to, and challenge where it must, including to protect our values and national security as the first duty of government.

Ahead of her visit, Chancellor of the Exchequer Rachel Reeves said: “Growing the economy and raising living standards is front and centre of this government’s Plan for Change. That growth must be secure, resilient, and built on stable foundations, including through careful pragmatic cooperation with international partners.

“By finding common ground on trade and investment while being candid about our differences and upholding national security as the first duty of this government, we can build a long-term economic relationship with China that works in the national interest.”

While in Beijing, the Chancellor will also visit Brompton’s flagship store. The enduring British bike brand is celebrating its 50th anniversary year, and its flourishing community in the Chinese capital as its foremost market is a major success story for UK exports to China.

In addition to building on the financial services relationship, the EFD will also seek to bring down barriers that British businesses face when looking to export or expand to China, supporting them to seize growth opportunities and follow in the footsteps of brands like Brompton, and other cornerstones of British culture and industry like Jaguar Land Rover, Unilever and Diageo – three companies whom Reeves will also meet with during her visit.

Reeves is also to visit Shanghai on Sunday to engage with representatives across British and Chinese business. Alongside London, the city is a leading global financial centre which has long been important for UK-China economic and financial links, including in financial services with the landmark financial market connectivity initiative between the London Stock Exchange and the Shanghai Stock Exchange entering its sixth year.

China is the world’s second largest economy and the UK’s fourth largest single trading partner, with a trade relationship worth almost £113 billion, and with exports to China supporting over 455,000 jobs in the UK in 2020.

UK stagflation crisis threat demands action

The UK economy is staring down the barrel of the stagflation gun, with stagnant growth and persistent inflation combining to create one of the most challenging financial environments in over a decade. 

This is the stark warning from Nigel Green, CEO of deVere Group, as this week the 30-year gilt yield hit a staggering 5.25%—its highest point since the 2008 financial crisis—underscoring the scale of the issue. 

He says: “Stagflation’s grip on the UK has been exacerbated by weak domestic growth, which under normal circumstances would prompt the Bank of England to lower interest rates. 

“However, with inflation still uncomfortably high, policymakers find themselves in a precarious position, hesitating to make moves that could further weaken the pound and worsen price pressures. 

Nigel Green continues: “For Chancellor Rachel Reeves, the situation is particularly dire. Her key fiscal rule—eliminating all non-investment borrowing by 2029—now hangs in the balance, as rising interest payments on debt eat into the Treasury’s capacity to act. 

“Achieving this goal will demand either politically challenging tax increases or deep public spending cuts. Both measures will hurt economic growth, amplifying the stagflationary spiral. 

“The rise in gilt yields signals growing investor caution about the UK’s economic outlook. 

“Higher borrowing costs are creating ripple effects across sectors, from property to retail, as businesses and consumers alike face higher for longer interest rates. At the same time, the weakening pound, spurred by fears of stagnation, makes UK assets more attractive to international investors.

“For global investors, the UK’s predicament is not just a warning—it’s a call to action. Stagflation may erode domestic purchasing power, but it also opens the door to undervalued opportunities in key sectors, particularly for those with a long-term strategy. 

“Fixed-income securities are more appealing given their higher yields, especially for those seeking safe havens in a turbulent global economy.”

While stagflation is a daunting challenge, it also forces innovation and adaptation. 

“For investors with ties to Britain, this is the time to reassess portfolios, hedge against inflation, and identify sectors that can thrive in a stagflationary environment. History teaches us that industries such as energy, healthcare, and tech have shown resilience, even in periods of economic stagnation.

“The gilt market itself is worth watching closely. The recent yield spike suggests a shift in sentiment, but for those who act decisively, these higher yields could lock in significant returns over the medium term. 

“Similarly, the weakening pound, while a burden for imports, is a boon for exporters and foreign investors looking to acquire UK assets at a relative discount.”

Nigel Green concludes: “The looming spectre of stagflation may sound like a warning bell, but it’s also a call for decisive action. The UK’s challenges are real, but so are the prospects for those who think globally and act strategically.”

Edinburgh poised to declare Scotland’s first visitor levy

Councillors set to grasp opportunity to introduce a levy that will ‘enhance and improve the city of Edinburgh’

After years of campaigning and engagement – including successfully advocating for a visitor levy to the Scottish Government to bring forward necessary powers – the Council is set to agree the Visitor Levy for Edinburgh scheme this month.

Following support from Councillors in August and the results of a 12-week public consultation, updated officer proposals will be considered by the Policy and Sustainability Committee on Friday, 17 January and by all Councillors at a special meeting on Friday, 24 January.

With over 4,500 responses, the wide-ranging consultation with residents, businesses and visitors reveals most people are aware of and supportive of the Council’s Visitor Levy plans.

Slight adjustments to officer recommendations have been made to reflect the public feedback, including:

  • 5-night cap: Capping Edinburgh’s levy at 5 consecutive nights per person, rather than 7
  • Campsites and caravans: Temporary campsites and parks proposed to be liable for the levy
  • Refunds within 5 working days: for all visitors eligible for national exemptions
  • New transition period: a levy grace period until May 2025 for bookings made for July 2026
  • Admin support for accommodation providers: equalling 2% of visitor levy income

If agreed, Edinburgh’s Visitor Levy charge will start being applied to bookings made on and after 1 May 2025 to stay in overnight accommodation in the city on and after 24 July 2026, representing a significant step forward in securing a new funding stream for the city.

Once established, the levy is expected to raise up to £50 million a year.

Council Leader Jane Meagher said: “This is the moment we have been working towards – a once in a lifetime opportunity to sustain and enhance Edinburgh’s position as one of the most beautiful, enjoyable destinations in the world. 

“With income of up to £50 million expected once it is established, the funding could provide Edinburgh with the single biggest injection of new funding this side of the millennium, providing a unique opportunity to further improve and protect all that makes Edinburgh the incredible destination it is today.

“We’ll be able to use funds to help us manage tourism sustainably and boost projects which benefit the experience of visitors and residents. I’m looking forward to working with Councillors to agree the scheme this month, which will allow further work to be carried out on the details of Edinburgh’s new levy.”

Some businesses have expressed concerns over Edinburgh’s ‘Tourist Tax’ proposals, however.

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said: “Given the importance of the tourist economy to the capital, Edinburgh Council cannot afford to be reckless with these plans. The implementation of short-term let licensing was a policy shambles and we cannot have history repeating itself with the visitor levy.

“Many simply don’t realise that this tax won’t just be paid by international visitors but by ordinary Scots staying in the city – be it for business purposes, seeing friends, visiting family in hospital, or taking in the Fringe. 

“Other European cities might have it, but they often charge a small flat rate, don’t charge their own residents, and don’t have a 20% VAT rate. The schemes are not comparable. There is a real risk of undermining Edinburgh’s position as a leading destination. 

“This policy will also disproportionately impact small local accommodation businesses, including self-catering and B&Bs, further increasing the administrative burden. The accumulative regulatory impact could cripple them at a time when recovery is precarious.”

“We also fear that the transitional period is too short. The Council still has a lot of work to do to reassure business that these plans won’t erode the very industry it is supposedly meant to support.”

Scottish business confidence rises in December

  • Business confidence in Scotland rose 13 points to 44% in December 
  • While firms’ optimism in their own trading prospects fell four points to 39%, their optimism in the economy rose 31 points to 49%
  • Overall UK business confidence dipped three points in November to 41%

Business confidence in Scotland rose 13 points during December to 44%, according to the latest Business Barometer from Bank of Scotland.

While companies in Scotland reported lower confidence in their own business prospects month-on-month, down four points at 39%, their optimism in the economy rose 31 points to 49%. Taken together, this gives a headline confidence reading of 44% (vs. 31% in November).

A net balance of 44% of businesses in the country also expect to increase staff levels over the next year, up 21 points on last month.  

Looking ahead to the next six months, Scottish businesses identified their top target areas for growth as introducing new technology (52%), entering new markets (42%) and investing in their team, for example through training (38%).

The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.   

National picture

Overall UK business confidence fell two points in December to 39%, although remained above the long-term average of 29%.

While firms’ confidence in the wider economy strengthened five points to 31%, their confidence in their own trading prospects fell eight points to 47%.  

London was the most confident UK nation or region in November (53%) for a second month in a row, followed by the North West (50%). 

Sector insights

Although confidence fell in the service sector, this was partly offset by rises in manufacturing and retail, with these sectors swapping places in December. 

Services fell from 46% to 35% in December – a fall of 11 points. In contrast, manufacturing and retail increased 10 points to 42% and 43% respectively, thereby taking manufacturing and retail above services for the first time in 4 months. Trading prospects for retail rose for the first time in three months, while construction confidence was steady at 41%, equalling last month’s result.   

Martyn Kendrick, Scotland director at Bank of Scotland Commercial Banking, said: “It’s encouraging to see Scottish business confidence end the year on the rise, and above the UK average.

“Businesses will be focused on putting their plans for fresh growth into action. We’ll continue to be by their side to support their ambitions.”

Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “In the last few months overall confidence has fallen incrementally, and in December the trend continued as it fell by 2 points to 39%. While there hasn’t been any significant one-month change, confidence has gradually drifted from the summer’s highs”. 

“The key difference in this month’s results is that the fall in confidence is driven by firms’ own trading prospects which have proven to be resilient over the last quarter. There was, however, more positivity regarding the wider economy and, going into 2025, this offers some hope if companies continue to feel confident about the economy.

“Elsewhere, although confidence fell in the services sector, this was partly offset by improvements in manufacturing and retail – which could be a significant for this time of year.” 

Paul Kempster, Managing Director for Relationship Management, Lloyds Bank Business & Commercial, said: “The mixed results in trading prospects and economic optimism suggest that while businesses feel they are facing some challenges, there is still some opportunity in regard to the wider economy.

“Although overall confidence dipped this month, we’re still optimistic that firms’ trading prospects will return to the levels seen earlier this year. 

“The regional picture is also mixed with significant increases in confidence in Scotland and Northern Ireland, but more acute falls in confidence in the North-East. As we enter the New Year, and businesses across the country consider their plans for 2025, we are committed to helping them to navigate their journey and prosper.”

Chancellor opens 100th banking hub in time for Christmas

  • Chancellor Rachel Reeves and Treasury minister Tulip Siddiq, have opened the 100th banking hub in Darwen, Lancashire.  
  • Banking hubs have been set up in response to bank branch closures, with 350 set to be rolled out by 2029.  
  • High streets up and down UK will be revitalised – helping raise living standards and deliver the Plan for Change 

Chancellor of the Exchequer, Rachel Reeves, and Economic Secretary, Tulip Siddiq, have opened the UK’s 100th banking hub in Darwen, Lancashire, which has been set up in response to bank branch closures in the town.   

The newly opened banking hub will give customers of the largest high street banks the ability to get cash out, deposit cheques and ensures that local residents have access to face to face banking services.   

Kickstarting economic growth is the number one mission for this Government – something cemented in the Plan for Change launched last week, where the Prime Minister redoubled our commitment to raise living standards in every part of the United Kingdom. The roll out of banking hubs will be a significant boost for local people and businesses, helping to revitalise the local high street and raise living standards across the UK. 

The opening of the 100th banking hub is a significant landmark on the road to delivering on the government’s manifesto commitment to work with industry to open 350 banking hubs by the end of this parliament.  

Rachel Reeves, Chancellor of the Exchequer, said: “Reaching this milestone of 100 banking hubs is a huge step towards making sure that people across the country have access to essential face-to-face banking services.   

“High streets are the beating heart of our communities but were neglected for too long under the previous government. We are revitalising our high streets with our target for 350 banking hubs, reforming business rates to make them fairer and clamping down on antisocial behaviour.” 

Banking hubs are a collaborative industry initiative, set up in response to bank branch closures onhigh streets across the country. 

Instead of one bank owning a branch, the responsibility is shared between the banks. This means that they can share the running costs and all operate in one convenient location.  

All customers will benefit from Monday-Friday access to cash and basic banking services via a traditional counter service operated by the Post Office. Community bankers from each of the five banks with the largest number of customers in the area will also come in one day per week to assist their customers with more complex banking issues like debt advice, bereavement services and fraud support.   

In the Darwen banking hub, the participating banks are NatWest, Santander, Lloyds, Halifax and Barclays, the banks with the most customers in that location. Opening the banking hub will protect access to cash and banking services for 10,000 local residents and 150 shops within 1 kilometre of Darwen town centre.   

The 100th opening is a significant milestone. In September, Economic Secretary secured a historic agreement from industry to deliver on this commitment, with 230 hubs expected to be open by the end of next year, helping to revitalise towns and high streets up and down the country.  

Tulip Siddiq, Economic Secretary to the Treasury, added: “We are delighted to see the continued growth of banking hubs, which are playing an essential role in meeting the needs of communities where traditional banking options have declined.   

“These hubs are not only vital for residents and businesses, but they also play a key role in revitalising our high streets, bringing footfall back to town centres, and repurposing unused buildings for community benefit. 

“The success of these hubs proves that shared banking services can provide a solution that benefits everyone, from residents to local businesses.”  

The opening of banking hubs can play an important role in revitalising our high street and repurposing disused buildings in town centres all while providing a vital service to businesses and people in those communities.  

Evidence from Brixham in Devon and Rochford in Essex  where banking hubs have recently opened has backed this up, research from Cash Access UK the group that run banking hubs shows that  almost half of businesses surveyed saying it has increased footfall in the town and 30% of residents saying that they visit the town more regularly and stay for longer because a banking hub has opened in the town. 

Gareth Oakley, CEO, Cash Access UK, said: “Access to cash and face-to-face banking services remain vital to millions of people and businesses who rely on it.  

“We’re delighted that banking hubs, alongside deposit services are proving to be successful and are making a real difference to communities and high streets up and down the country.” 

‘Bombshell’ report shows short-term lets boost Scottish economy by £864m per year – with no evidence of housing impact

BiGGAR Economics challenges ‘false narratives’ surrounding Scotland’s self-catering sector now at risk from heavy-handed government regulation

NEW independent analysis from a respected Scottish consultancy reveals the substantial positive economic impact of Scotland’s self-catering industry which was also shown to have a negligible effect on housing.

BiGGAR Economics calculated that short-term lets (STLs) contribute nearly £1bn gross value added (GVA) to the Scottish economy while supporting approximately 30,000 jobs. By accommodating visitors, STLs generate economic activity across Scotland, with the local impacts exceeding residential use, supporting an additional £32,400 GVA per property.

Guests staying in self-catering accommodation, termed ‘secondary lets’ in Scottish STL legislation, also spend more than the average visitor to Scotland, with knock-on gains for related tourist and hospitality businesses. Alongside this huge economic boost, the researchers also highlight that self-catering accounts for less than 1% of the country’s total housing stock.

This challenges the narrative that STLs are fuelling Scotland’s housing crisis, with self-catering at only 0.8% of the country’s housing stock, too low a proportion to have a meaningful impact on local housing markets. Moreover, according to the report, in every local authority area, economically inactive empty homes account for a larger proportion of total dwellings than from secondary lets.

The key headlines include:

  • STLs are estimated to generate £864m GVA and support 29,324 jobs across Scotland;
  • Edinburgh and Highland together account for 44% of the total economic impact but the sector’s benefits are dispersed throughout Scotland;
  • The annual GVA associated with an average owner-occupier/private rented household in Scotland was £14,451, compared to £50,159 for a two-bedroom STL; and
  • STLs make up a tiny proportion of Scotland’s housing stock, with self-catering accounting for just 0.8%. This is considerably less than the 3.6% that economically inactive empty properties account for.

This study comes as the Scottish Government published an implementation update report on STL licensing which the industry maintains did not adequately address their longstanding concerns. At a local level, councils such as Highland and Edinburgh are also assessing their regulations.

BiGGAR’s new analysis is based on the best available evidence on STLs in Scotland. The findings have been shared with Scottish Government Ministers and officials.

Graeme Blackett, Director of BiGGAR Economics, said: “This report shows that secondary lets make an important contribution to Scottish tourism and economy overall, supporting almost 30,000 Scottish jobs.

“Our research also concluded that it was clear that secondary lets are not a driver of the wider Scottish housing market.

“If short-term let regulations leads to a reduction in the supply of secondary lets, that will have a negative impact on the tourism economy, without delivering any solutions to Scotland’s wider housing challenges.”   

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said: “This is yet more compelling evidence that short-term lets aren’t the main contributor of the housing crisis but are instead turbocharging local economies with a near £1bn positive impact while supporting 30,000 jobs.

“The current unbalanced regulatory framework does not reflect this reality and changes are needed before irreversible damage is done.

“Local councils should take heed of the report’s findings when considering their approach to planning policies and control areas to ensure the relatively small number of valuable short-term lets are protected.

“For policymakers, the message couldn’t be clearer: you can’t solve a housing crisis by producing a crisis in Scottish tourism by decimating local businesses that underpin local economies. Attention must shift to the real causes of the housing crisis.”

Economic-Impact-of-Short-term-Lets-in-Scotland-Report-by-BiGGAR-Economics-11Dec24Download

Deputy First Minister outlines steps towards financing a green future

A range of measures to transform how Scotland attracts and supports capital investment into the country have been unveiled

Deputy First Minister Kate Forbes will take on a cross-government leadership role as the Scottish Government’s ‘Investment Champion’ to deliver a national pipeline of strategic investment opportunities and a seamless, co-ordinated approach to building relationships with investors and developers.

Practical steps being delivered include an Investment Unit to identify and tackle barriers to investment; the creation of a single portal for investment inquiries and another detailing investment opportunities; and a new Cabinet sub-committee to co-ordinate activity.

The Scottish Government will also explore new financing models including how public sector guarantees could be used, a potential Scottish Bond, and public-private partnerships.

Addressing the Investment Association Conference in Edinburgh Ms Forbes said: “Increasing the level of private investment into Scotland’s economy is essential to our ambitions – for growth, for jobs, for reaching net-zero, and for improving our public services. Without investment and the growth it can catalyse, we can achieve none of those goals. 

“I will be working to tackle barriers and blockers; and to ensure that the system as a whole works cohesively, effectively, and quickly, to support investors and to deal with issues as and when they arise. 

“Scotland has the talent, skills and resources in abundance to be a major player in the energy transition and secure a prosperous and sustainable future. We need to work better, smarter, and quicker to ensure that we can create an investor-friendly environment and seize the many opportunities which lie ahead. ”

The Deputy First Minister’s speech.