Reeves’ plans for expanding UK airports based on flawed economics

The New Economics Foundation responds to Rachel Reeves’ speech on economic growth and planning. 

Dr Alex Chapman, NEF senior economist, said:

“Rachel Reeves’ commitment to Heathrow expansion relies on flawed economics. By the government’s own metrics, airport expansion won’t deliver serious economic growth. Business air travel peaked two decades ago and a new runway won’t change that.

​“The primary impact will be to encourage UK households to spend their cash overseas, depriving high streets and domestic destinations of spending. The UK’s domestic tourism industry is already suffering. Growth in incoming tourists has been outnumbered 3:1 by Brits leaving for trips abroad. More outbound flights will deprive British regions of vital spending and is an ​‘anti-levelling up’ move.

“If the government really wants to improve life in the UK it should make smart public investments in renewables to get energy bills down, in green industry and infrastructure to boost growth and wages, and in the NHS and social security to help us keep healthy.”

Hannah Peaker, deputy chief executive, said:

“The chancellor says that UK living standards cannot be improved without growth. But growth does not inevitably lead to making people better off. Growth constrained to the dividends paid to wealthy shareholders of companies like Heathrow Airport, many of who are domiciled overseas, might improve the numbers but won’t improve the outcomes. If the result is more inaccessible jobs in the south of England, housing that is out of reach for most families, and declining highstreets, we will continue to see growth which only benefits the already well-off, and declining living standards for everyone else.

“More solar farms, electric vehicle charging and better rail links are excellent ways to improve people’s lives, but there is far more government spending needed to fix the foundations of our economy. A thriving economy relies on the basics: all of us having access to affordable transport options, a strong NHS and a social safety net when we fall on hard times. Fixing these foundations should be a prescursor to growth — not a reward for it.”

Notes

The New Economics Foundation is a charitable think tank. We are independent of political parties and committed to being transparent about how we are funded.

Please contact NEF for a full briefing of evidence challenging the economic case for aviation expansion in the UK.

NEF briefing on the economic impact of airport expansion in the south east is available here: https://​newe​co​nom​ics​.org/​2​0​2​5​/​0​1​/​a​i​r​p​o​r​t​-​e​x​p​a​n​s​i​o​n​-​w​i​l​l​-​n​o​t​-​d​e​l​i​v​e​r​-​t​h​e​-​g​r​o​w​t​h​-​t​h​e​-​g​o​v​e​r​n​m​e​n​t​-​wants

Previous NEF research challenging the economic case for airport expansion can be found at https://​newe​co​nom​ics​.org/​2​0​2​3​/​0​7​/​l​o​s​i​n​g​-​a​l​t​itude