Rachel Reeves is plotting another “growth push” as the Labour party prepares itself for a potentially bruising defeat in the local elections.
The Chancellor is set to unveil a new push for fiscal discipline, a closer relationship with the EU and planning reforms in a bid to ease the nerves of the party.
The forthcoming local elections are set to come at a rocky time for Keir Starmer’s premiership as he faces questions over the appointment of Peter Mandelson to the US ambassadorship.
Scrutiny is set to continue this week as Starmer’s former chief of staff Morgan McSweeney and former head of the Foreign Office Philip Barton give evidence in Parliament on Mandelson’s vetting.
The Prime Minister has insisted he will contest the next election for his party, meanwhile Reeves os expected to attempt to shore up support with flagship speeches throughout May and June.
Sources told the Financial Times that in June the Chancellor will set out plans to go “further and faster” on ways to boost growth.
This is expected to include another attempt to overhaul the planning regime in the UK and efforts to increase the use of AI.
Since entering No.11, Reeves has staked her political career on unleashing growth across the UK but has been criticised for stifling businesses with two tax-heavy Budgets.
Reeves’ taxes stifle growth
The Chancellor revealed £40bn in tax hikes in her first Budget and followed it up with another £26bn in 2025. Meanwhile, growth efforts have continued to wane with the economy expanding 1.3 per cent in the last year after sluggish 0.1 per cent growth in the final quarter of 2025.
The International Monetary Fund handed Reeves the biggest growth forecast downgrade of any country in the G7 earlier this month as the consequences of the Iran war rattle the global ecosystem.
Growth for 2026 was revised down by 0.5 percentage points as trade disruption due to the Iran war has left the UK economy exposed.
All other G7 countries, plus the likes of Russia, Spain, South Africa and Nigeria, were predicted to suffer less damaging hits to growth over 2026.
As part of her speeches over the next few months, Reeves is expected to lay out a “responsible” plan to see households and businesses through the Iran war fallout.
This is set to include targeted support for energy bills, mainly in the winter. Allies of Reeves told the FT that any major bailout would be funded by borrowing, which would lead to higher interest rates and mortgage payments.
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