What Chancellor Rachel Reeves' growth speech means for the Scottish economy - tariffs, Heathrow, Europe

In a wide-ranging speech on Wednesday morning, the Chancellor outlined a series of measures ministers hope can boost Britain’s flagging economy, and insisted the government had “begun to turn things around”.

She said: “We have fundamental strengths in our history, in our language and in our legal system to compete in a global economy. But for too long that potential has been held back. For too long we have accepted low expectations and accepted decline.

“We no longer have to do that. We can do so much better.

“Low growth is not our destiny, but growth will not come without a fight, without a government willing to take the right decisions now to change our country’s future for the better.”

With that pledge, here are four things from Ms Reeves’s speech that could impact Scotland’s economy.

Trade

Expanding Britain’s trade opportunities was a key aspect of Ms Reeves speech, with the Chancellor highlighting several areas of potential expansion.

Ms Reeves told journalists and Cabinet members the government would be “guided by one clear principle, above all, to act in the national interest for our economy”, before adding this meant building on the “special relationship with the United States of the President [Donald] Trump”. The US accounts for 17.6 per cent of the UK’s trade and is also Scotland's top export destination, accounting for around 16 per cent of Scotland's goods exports when oil and gas are excluded.

Finding a way to improve this would obviously benefit Scotland, not least with the issue of tariffs still not being addressed by the incoming administration, amid concerns over Scottish products such as whisky.

Ms Reeves also revealed trade deal talks with India are set to restart, to finish the “free trade agreements and bilateral investment treaty that the last government failed to deliver”.

Closer ties with Europe

The Chancellor also claimed the government would continue resetting the UK's relationship with the European Union - "our nearest and biggest" trading partner.

Ms Reeves claimed her government was being pragmatic, but “ambitious” about its relationship with the bloc, unlike the previous government, whom she claimed had a policy "not to engage with the EU" at all.

Closer ties with Europe could be many things. There was a suggestion earlier this week that a pan-European customs area is something that could be considered. Ministers have refused to rule it out. Changes to Britain’s deal would represent a boost to Scottish business and exports.

However, opposition parties have suggested this doesn’t go far enough, with the SNP criticising the decision to stay out of the EU single market, and the Lib Dems calling for a new EU-UK trade deal.

Industrial strategy

One area where the Chancellor referenced Scotland specifically was the UK government’s Industrial Strategy, which seeks to create the right conditions to increase investment in sectors like life sciences, artificial intelligence and advanced manufacturing.

Ms Reeves claimed this was being worked at collaboratively with the devolved administrations and would help investment across the UK.

She said: “We are working with the devolved governments to ensure the benefits of growth can be felt across Scotland, Wales and Northern Ireland, including by partnering with them on the Industrial Strategy to support their considerable sectoral strengths.”

A third runway at Heathrow

Announcing support for a third runway at Heathrow, Ms Reeves claimed it would boost Scotch whisky and Scottish salmon exports.

She said: "According to the most recent study from frontier economics, a third runway could increase potential GDP by 0.43 per cent by 2050.

"Over half - 60 per cent - of that boost would go to areas outside of London and the South East in creating increasing trade opportunities for products like Scotch whisky and Scottish salmon, already two of the biggest British exports out of Heathrow."

Heathrow is Britain’s biggest airport and was the busiest European airport in 2023.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, welcomed the move but said the Chancellor must ensure Scotland plays a role in the runway’s creation.

The Scottish Government said expansion must not come at the expense of long-haul flights to Scotland or result in more centralisation of the economy to London and the South East of England.

Ministers have previously backed the plans, with Heathrow saying it would result in 16,000 Scottish jobs and £14 billion in growth.

Dr Cameron urged Labour to make good on previous commitments for the construction of a new supply chain hub in Scotland where materials would be pre-assembled before being sent to London.

She said: “Direct access to the airport’s biggest suppliers allows us to provide a pipeline of expertise, and will provide Scottish business with the credibility and leverage to secure work on other projects both in the UK and internationally.

“What will also be key is making sure we have increased domestic connectivity to Scotland and more direct flights, helping us provide the national and international connectivity vital to economic growth.”

Tavish Scott, chief executive of Salmon Scotland, said: “The Chancellor is absolutely right to highlight the role that Heathrow plays in supporting British business. Scottish salmon is the UK’s number one food export and is the airport’s single biggest export by volume.

“Scottish business has long pressed for a third runway at Heathrow, so we welcome this announcement and any measures that will support the sustainable economic growth of the Scottish and UK economy.”