𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The desperation which has gripped Sir Keir Starmer’s Government can no longer be disguised. Rachel Reeves delivered a speech to the City of London intended to reassure her party, our country and world markets that she has a plan to rescue Britain from no-growth quagmire. Her solution is to put the country into reverse.

In the absence of new ideas, the Government is on a full throttle mission to re-align with the European Union. It blames Britain’s woes not on its brutal tax raids but on Brexit. Ms Reeves loathes Britons’ decision to quit the bloc, declaring in her landmark Mais lecture: “Brexit did deep damage. Recent independent studies indicate its GDP impact could be as much as 8%.”

Labour lacks the popular mandate and political courage to reverse Brexit. It knows disaster would await if Sir Keir and Ms Reeves squared off against Nigel Farage and Kemi Badenoch in a new Brexit referendum, so instead the strategy is accept EU rules in return for greater access to markets in a frantic attempt to ignite growth.

Rather than accepting a common rulebook in a few isolated areas, she believes there is sweeping potential in agreeing wholeheartedly to Brussels red tape.

“Now,” she told her audience at Bayes Business School, “there are areas in which regulatory autonomy may be necessary for sectors with unique characteristics or strategic importance for the UK. But that should be the exception, not the norm.”

This will horrify Brexiteers, for whom restoring the freedom of the nation to write its own rules is both an historic opportunity to gain a competitive edge over rivals, and a core tenet of national sovereignty to be guarded for future generations. Just in case anyone in the auditorium was in any doubt about the significance of her announcement, the Chancellor made it clear she was ready for a fight.

“This will require us to make and win the political arguments,” she said. “Believe me, I’m up for it. Because I believe absolutely that closer alignment is the right course for our country; a course chosen as a sovereign nation, a course chosen in our national interest.”

Rather than try to steal a march on the EU in the face of ferocious competition from emerging economic powerhouses, she let the world known that Britain on her watch is throwing in its lot with the bloc.

“If we are to enhance the competitiveness of European industry in the face of global competition, we must work together – remove trade barriers between us, and avoid collateral harm between trusted partners,” she said.

She insists she is not turning “back the clock” but looking “forward to a new and stable future relationship”. But her speech will have left everyone who is disappointed that Britain has not made greater use of Brexit opportunities with a sinking feeling. Her vision for Britain is certainly not making the UK Europe’s answer to Singapore.

The other big idea is to double the funding for Oxford and Cambridge’s development corporations in an attempt to create Europe’s answer to Silicon Valley.

No one would disagree that Britain should make the most of its world-class university cities. But throwing cash at wealthy regions of the United Kingdom is hardly levelling-up. And she announced her plan while also attacking the “fiction” that prosperity can be based on the success of just a few places – an apparent contradiction.

One element of the Chancellor’s proposals could have major consequences. She wants regional leaders to have “control over a share of some national taxes”, with the “proceeds of growth benefiting the places that generated that growth”.

Ms Reeves, MP for Leeds West and Pudsey, knows that Britain is hideously reliant on the wealth of London and the southeast. And she wants the country to “back Manchester and Liverpool and Leeds to match and overtake Stuttgart, Turin, and Lyon” – but right now her Treasury is straining to balance the books.

America’s prosperity has been powered by opening up new home-grown energy sources and the remarkable economic growth of cities such as Austin, Texas. For all her good intentions, Ms Reeves’s speech did not read like a recipe for a similar renaissance in Britain.

For months, financial commentators have fretted about the risk of an Artificial Intelligence “bubble” bursting, but Ms Reeves’s Treasury plans to invest £500million backing British AI companies. Those with long memories will shudder at the thought of Whitehall “picking winners”, as it used to be called.

But Ms Reeves loves the idea of an interventionist Government and is a rebel against the “doctrine of the passive state”. If her big bets deliver big wins the whole country will prosper. If the gamble fails, however, then the Government will have another fiasco on its hands.

She won warm applause from the academics and business figures in a warm room in central London, but on the frontline of the economy many businesses are in a battle for sheer survival.

The reality is that one of the greatest threats to multitudes of companies in the UK – regardless of whether it is a steelworks, a fish and chip shop or an AI data centre – is Britain’s punishingly high energy costs, and these have the potential to get much worse if the crisis in Iran escalates.

Ms Reeves admitted this is among factors likely to put “upward pressure on inflation in the months to come”. A surge in household bills will have profound consequences for local shops and services, unless the Government takes radical action to shield Britons from a new cost of living crisis.

Ms Reeves presides over national finances which are as precarious as one of those towers of wooden blocks that families build after Christmas dinner. Making commitments to spare motorists a hike in fuel duty has the potential to spook markets. Labour is facing calls from trade unions, the Tories, Reform UK and the oil and gas industry to u-turn and allow a new era of North Sea extraction, as the world lurches into an energy crisis. But Sir Keir knows there would be fury on the eco-Left – represented at his cabinet table by Energy Security Secretary Ed Miliband – if he announces that it is time to take a new approach on net zero, and makes lower bills and energy independence a national priority.

The grim backdrop to the Chancellor’s speech is that weaknesses in Britain’s military defences are now glaring. But without a major acceleration in growth, there is scant chance of true rearmament.

The Chancellor is right to champion the technologies of the future and to aspire to make the country a global leader in quantum computing, but if the UK cannot protect its borders and its people then it faces an existential crisis.