Growing the economy is of utmost importance in improving people’s living standards, stated Rachel Reeves. Addressing a gathering of business leaders in Saudi Arabia, the Chancellor acknowledged the necessity of enhancing the UK’s productivity to achieve economic growth. Reports suggest that the Office for Budget Responsibility is set to revise down its productivity forecast, potentially impacting the public finances by over £20 billion and leading to speculations of upcoming budget adjustments.
At the Future Investment Initiative (FII) event in Riyadh, Ms. Reeves highlighted the role of artificial intelligence in solving the productivity challenge, emphasizing the government’s primary focus on economic growth. Stressing the significance of investing in infrastructure and technology at both business and state levels, she emphasized the essential link between productivity and economic expansion.
While acknowledging the anticipated downgrade in the UK’s productivity outlook by the OBR, Ms. Reeves clarified that it was not due to government actions but stemmed from past issues like Brexit and the financial crisis. Ensuring that budget decisions would not hinder economic growth, she encouraged international businesses to invest in the UK, aiming for a trade deal with the six Gulf Cooperation Council countries soon.
Despite acknowledging high inflation levels in the UK, Ms. Reeves attributed it to trade costs with neighboring countries and partners, pointing to the Brexit impact. Praising the UK’s trading agreement with the EU, she expressed satisfaction with the response received, emphasizing the stability it brought. The OBR’s projected downgrade in the UK productivity outlook, exceeding analyst expectations, coincided with positive data showing an uptick in private sector activity, particularly in manufacturing, following Jaguar Land Rover’s production resumption after a cyber attack-induced shutdown.
The S&P Global flash UK composite purchasing managers’ index reported growth in October, surpassing September’s reading and beating economists’ forecasts. Any reading above 50 indicates expansion, with October’s figure exceeding expectations and indicating a strengthening economic activity trend.