Rachel Reeves needs a new Heathrow runway more than Britain does

Rachel Reeves is discovering there are no easy shortcuts to boosting the UK’s sluggish economic growth. She has signalled her support for a highly controversial third runway at Heathrow airport, even as the government prepares to allow Gatwick and Luton to expand their operations and has already done the same at Stansted and London City airports.

Speaking at the World Economic Forum in Davos today, the chancellor declined to comment on Heathrow expansion because she has not yet won cabinet approval for it. She might have cleared that hurdle by the time she makes a speech on growth next week.

In Davos, Reeves declared that growth must trump “other things” and declared war on nimbyism. She argued that the problem under the previous Conservative government was that somebody always said they “don’t like that investment, we don’t like that wind farm, we don’t like those pylons, we don’t like that airport, we don’t want that housing near us”.

Positioning herself as a “Just Say Yes” chancellor on growth, Reeves insisted: “The answer can’t always be ‘no’, and that’s been the problem in Britain for a long time, that when there was a choice between something that would grow the economy and anything else, anything else always won.”

However, Heathrow has been a red-hot political potato since a Blair government white paper in 2003 backed the idea of a third runway. The current cabinet is split: eight of its members have voted against Heathrow expansion, including Keir Starmer and Ed Miliband, who threatened to resign from Gordon Brown’s cabinet over the issue in 2009.

But Starmer now appears to be backing Reeves, and Heidi Alexander, the transport secretary and a Starmer loyalist, is less likely to make trouble over Heathrow than her ousted predecessor Louise Haigh.

As the minister responsible for net zero, Miliband will now come under strong pressure to lead the fight against a third runway. Sadiq Khan, the London mayor and strong opponent of Heathrow expansion because of noise and air pollution, will almost certainly launch a legal action. Andy Burnham, the mayor of Greater Manchester, will rightly warn that a third runway and the extra road and rail capacity needed would suck more investment to the South East and away from poorer regions.

The Heathrow plan will force the government to choose between two of its key objectives – growth and net zero. Its climate change committee opposes airport expansion and the UK arguably needs to do more on climate now Donald Trump is again pulling the US out of the Paris Agreement.

Expanding airport capacity could wipe out emission cuts from the government’s clean-power measures and 20 climate action groups have urged Starmer to think again on Heathrow.

Another Heathrow runway wouldn’t be a quick fix and would take between 10 and 15 years as there is no current planning application on the table. But crucially for Reeves, reviving the idea sends a powerful signal that growth really is the government’s “number one priority” – a much-needed example of matching its rhetoric with a firm proposal.

Ministers have not yet set out a credible plan for growth that satisfies the financial markets or, senior civil servants tell me, “gives Whitehall its marching orders”.

Significantly, the government has fired Marcus Bokkerink as chair of the Competition and Markets Authority for being seen as a blocker of growth measures. He has hit back with a warning against competition authorities becoming “vulnerable to short-term expediency or vested interests”. Again, no easy answers.

Her push on growth also tells us Reeves is fighting back hard after a miserable start to 2025 and premature reports she might not survive as chancellor, based on a short-lived wobble in the bond markets. However, every economic statistic is a challenge for Reeves now that her performance is under the microscope.

Today’s figures, showing public sector net borrowing, at £17.8bn in December, were worse than expected and bad news grabs more headlines than good. Most of Reeves’s growth measures will have only a long-term impact and her critics say her October Budget has harmed short-term growth prospects.

The chancellor is using Heathrow to tell us she is up for the fight, even one with her cabinet colleagues and the strong environmentalist tendency in her party. One Labour MP said it was “a sign of her desperation on growth”.

Her strong pro-growth message also allows her to be upbeat after overdoing the gloom – and damaging business and consumer confidence – as she blamed her admittedly rotten inheritance on the Tories. Labour would never admit it but a bit of Boris or Trump boosterism is needed to create confidence and attract investment.

Reeves is right to go for growth. Without it, the Starmer government’s entire project will fail. For the woman who wants to be known as the Iron Chancellor after Margaret Thatcher, there really is no alternative.