Rachel Reeves targets AI and EU in economic growth plan

The UK will achieve “the fastest AI adoption in the G7”, Rachel Reeves has said.

Reeves said quantum computing will create 100,000 jobs and said UK Government investment is driving progress in the tech sector.

The chancellor was speaking in London, where she set out the next phase of the Labour government’s growth plan.

It has identified the “three biggest opportunities for growth”: closer ties with the European Union, a “step change” in AI and the “unlocking” of growth in all UK nations and regions.

The speech precedes the chancellor’s visit to Spain this week for economic talks.

On digital, the government is to launch its £500m Sovereign AI Unit next month. It aims to help AI firms scale up without leaving the UK. An AI Economics Institute is to follow to improve understanding on the impact of the tec on jobs and productivity.

Up to £2bn in investment in quantum is promised over the next decade, with more than half of this to come over the next four years.

There will also be new cross‑economy “sandboxing” powers to test innovations in live markets with targeted, time‑limited regulatory changes and close supervision. It is hoped that this could allow accelerated access to new life-saving treatments by enabling controlled testing of innovative medicines. 

On the EU, Reeves said the government will seek a new economic partnership to improve resilience, working closely with the bloc.

An alignment of rules will be considered “where it boosts long-term growth and benefits customers, supports investment and better jobs, preserves or enhances UK security and resilience and provides stable, forward-looking certainty for business”, the government said.

However, it emphasised that this will not include a return to free movement.

The speech comes almost 10 years after the Brexit referendum and the Conservatives have accused Labour of seeking to “row back on Brexit”, accusing the Starmer administration of “blaming anyone but themselves for their economic failures”.

Commenting on the speech, Charandeep Singh, chief executive of the Scottish Chambers of Commerce, said:  “The chancellor is right to put AI and innovation at the centre of the UK’s growth strategy. In an increasingly competitive global economy, accelerating adoption of transformative technologies, including AI and quantum, will be critical to driving productivity, investment, and high-value job creation.

 “This focus on AI, closer ties with Europe and regional growth reflects the priorities we hear consistently from businesses across Scotland. Our members will be excited by the ambition shown today, particularly given Scotland’s world-class strengths in AI, data, and advanced research.

 “Ensuring that businesses in every part of the country – including Scotland’s towns, cities, and rural communities – can access the benefits of AI and new technologies will be key to unlocking economic growth that is both inclusive and sustainable.

 “The priority now is delivery. Businesses must see these commitments translated into practical support – from access to digital skills, to stronger links with European markets and clear pathways to commercialisation. Scottish businesses stand ready to work with government to turn this ambition into tangible economic impact across the country.”