Reeves's plans will boost UK but it will take a long time

UK Chancellor Rachel Reeves has announced a series of measures aimed at revitalizing the British economy, including the construction of a third runway at Heathrow Airport, the creation of a "European Silicon Valley" between Oxford and Cambridge, and the relaxation of planning restrictions. The core objective of these initiatives is to stimulate economic growth in the UK and reverse the current sluggish growth situation.

Reeves emphasized that these changes will drive long-term growth and attract the attention of global investors, who previously had some doubts about the UK's investment prospects. She believes that the "supercity" plan, connecting Oxford and Cambridge and linking them to new and old population centers, will appeal to large global investment funds. Combining this plan with institutions like the City of London, Google's AI company DeepMind, and the Francis Crick Institute, the UK will possess a remarkable global asset in the 21st-century economy.

Investing capital into integrated large-scale development plans, connecting two of the world's top academic centers, involving facilities such as housing, laboratories, offices, hospitals, reservoirs, roads, and railways, is a prudent move for large global investors. This goal has long been a dream. However, the UK has severely restricted the growth of its most attractive technological and economic assets in the past. Reeves' plan appears to put an end to this situation.

Previous governments have failed to fully utilize their political capital to push through growth-promoting changes, such as the expansion of Heathrow Airport and, in particular, the creation of a "golden triangle" of future growth between Oxford and Cambridge. These grand plans have previously remained at the discussion level, failing to be implemented, which has disappointed international investors who own much of the UK's infrastructure. Reeves stated that she will leverage the Prime Minister's majority to eliminate the opposition that has previously hindered or severely delayed these plans.

Nevertheless, the government's plans still face challenges. The budget's changes to inheritance tax have sparked protests from farmers. If the government's agenda is implemented, there may be more protests from groups in the airport and Fenland areas. This is, to some extent, an early test of whether the government is genuinely committed to changing national investment. Another test is when and how these changes will manifest. Government officials have indicated that these changes, particularly in the Oxford-Cambridge "European Silicon Valley" plan, will become apparent during this parliamentary term.

However, long-term growth expectations are built on the foundation of short-term economic pain. Consumer and business confidence has declined following the budget announcement. The Chancellor stated that the government will further cut welfare and subsidies to control spending on the growing number of unemployed or working but benefit-receiving individuals. Additionally, businesses in the hospitality and retail sectors will bear a disproportionate burden from the increased budget taxes. The runway in West London and the laboratories in Oxford may not compensate for these losses.

The government also faces the challenge of maintaining flexibility. The government's AI strategy released earlier this month may already be overtaken by the latest developments from Hangzhou's DeepSeek. Are Reeves' planned data centers still needed? Industry, infrastructure, and trade strategies are also being developed. Time is of the essence, and the question is whether the fruits of long-term growth can materialize quickly enough.