Artificial intelligence (AI) and “deeper” ties with Europe are the best ways to get the economy growing, the chancellor will say on Tuesday.
Rachel Reeves will argue that the UK cannot afford to “bury our heads in the sand”, and allow other countries to lead the development of AI, in the annual Mais lecture.
While she will also say that closer ties with the European Union (EU), as well as regional growth, are key to kickstarting the economy.
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Ms Reeves will commit £500m to back the most promising AI companies in the UK.
She will also say that quantum computers, which can work on multiple potential answers at once, vastly reducing the time it takes to get a solution, are the next great leap in technology that the UK needs to be ahead of the game in.
Ms Reeves will announce £1bn investment to buy commercial-scale quantum computers.
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Her lecture comes following anaemic growth figures. The economy didn’t grow at all in January, and only grew by 0.2% in the three months to January.
The Office for Budget Responsibility (OBR) downgraded its growth forecast for 2026 a fortnight ago – although it is forecast to grow slightly quicker than previously expected in 2027 and 2028.
2026: 1.1% (decreased from 1.4%)
2027: 1.6% (increased from 1.5%)
2028: 1.6% (increased from 1.5%)
2029: 1.5% (unchanged)
2030: 1.5% (unchanged)
Ministers are also grappling with the economic consequences of the Iran war, which threatens to push up energy prices and inflation if the conflict continues for much longer.
Ms Reeves met with Ireland’s finance minister, Simon Harris, on Monday, and discussed deepening economic ties with the EU.
UK must ‘chart our own course’ on AI
Ms Reeves will tell an audience from the City of London: “In this changing world, Britain is not powerless. We can shape our own future. Our method is stability, investment and reform – through an active and strategic state.
“Today, I am making three big choices on the greatest growth opportunities for Britain in the decade to come: growth in every part of Britain, AI and innovation, and a deeper relationship with the EU.”
The chancellor will say the UK must “chart our own course” on AI.
“AI is the defining technology of our era,” Ms Reeves will say. “The choice is this: we can bury our heads in the sand and leave it to other countries – whose values may differ from ours – to shape and own this technology.
“We can leave it to the market alone, and let the balance of risk and reward be determined by a super-wealthy few. Or we can chart our own course,” she is expected to say.
She wants the UK to achieve the fastest adoption of AI in the G7 group of wealthy nations.
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The annual Mais lecture is the City of London’s foremost banking and finance event, hosted by City St George’s University.
Ms Reeves previously gave the lecture while shadow chancellor in 2024, while other recent speakers have included Rishi Sunak, George Osbourne, Mark Carney, and Odile Renaud-Basso, President of the European Bank for Reconstruction and Development.
