Rachel Reeves has pledged to tackle the UK’s productivity challenge at the budget this autumn.
The Chancellor Reeves said investment in infrastructure projects and reform of the planning system form part of the Government’s plans to boost the economy’s productive capacity.
“If renewal is our mission and productivity is our challenge, then investment and reform are our tools,” she wrote in an editorial for The Guardian newspaper.
The Government’s plans to cut red tape and shift responsibility away from councillors and towards expert officers are set out in its Planning and Infrastructure Bill, which is currently making its way through the House of Lords.
Writing in the newspaper, Ms Reeves added that Labour’s second year in power will be focused on “building a stronger economy for a renewed Britain”.
She wrote: “Working people across Britain are striving and grafting, but they haven’t had the tools they need for the job. They have not seen their incomes rise as a reward for their hard work.
“There is that sinking feeling that families and businesses across the country feel at the end of every month that they are working hard, but getting nowhere.
“There is nothing progressive – nothing Labour – about an economy that is not productive and does not reward those who contribute.
“Since I became shadow chancellor and then Chancellor, I have known that breaking this cycle will require our sustained effort across many fronts.”
Ms Reeves also said her decision on tax rises would be set out in a “responsible manner” at the budget, despite some already “claiming to know” her plans.
Her comments come as the latest gross domestic product (GDP) figures are set to be released on Thursday.
In April this year, the economy saw the biggest monthly contraction since October 2023.
Manufacturing activity had pulled back sharply amid a record drop in exports to the US following President Donald Trump’s tariff hikes.
Official figures showed gross domestic product (GDP) fell by 0.3% in April, compared with growth of 0.2% the previous month.
Productivity was 0.2% lower in the first quarter of 2025, in comparison to the first three months of 2024, according to the Office for National Statistics.
In July, Cabinet ministers were told to prioritise “productivity-enhancing opportunities” when it comes to decisions on Government contracts.
Ms Reeves and Cabinet Office chief Pat McFadden said in a letter that public procurement expenditure should boost “British industry, jobs, skills, productivity”.