On Tuesday, Chancellor Rachel Reeves became the first person to deliver a second Mais Lecture, the prestigious annual event hosted by the Bayes Business School. Her speech outlined a mission to tackle “our medium-run productivity performance, and build an investment-led growth model for the UK”. If that wasn’t vague enough, she also said this would “build growth that is both secure and resilient”. This is the essence of the Chancellor’s much-quoted economic philosophy, “securonomics”.

It’s quite clear already what has caused Britain’s economic and geopolitical insecurity. The country’s addiction to cheap imports is paid for through overseas borrowing. This happens alongside a narrow focus on a few sectors, particularly the “knowledge economy”, which has made Britain vulnerable to global shocks. So how would the Chancellor try to create a more resilient economy? Reeves is relying on “three big bets”: closer ties with the European Union to reduce prices and generate more overseas investment, banking on AI to boost growth, and city-based regional investment.

But this plan is based on pure fantasy. The economy has been in anaphylactic shock since the financial crisis, and the Chancellor’s response is to hand it a Snickers. While Reeves may have doubled down on her rhetoric, her Mais Lecture reveals the contradiction at the heart of the Government’s economic strategy. On the one hand, it claims that the country was left vulnerable due to a failing economic model. On the other hand, it claims the only way to get the UK back on its feet is to keep doing what it did before.

Let’s take the most obvious example: closer ties with the EU. When Britain joined the Common Market in 1973, the trade deficit with Europe was around 0.6% of GDP. When Britain voted to leave in 2016, it stood at 2.2% of GDP.  In 2024, it stood at £94 billion, around 3% of GDP. If a country is running a trade deficit, this means that more money is leaving the economy than coming in. When one combines this with the flow of money from investments made by the EU into the UK, £132 billion left these shores to head to Paris, Berlin and Rome. How will perpetuating this imbalance help grow the economy?

The gamble on AI is another example of not understanding that technological change is a tool to serve trade rather than a strategy in its own right. A frequent refrain going around at the moment is that organisations are spending large sums on AI and seeing little return. Offering the same goods and services but paying foreign-based AI companies for access to their technology will not change anything.

Finally, the danger for regions is that HM Treasury wishes to turn every city into a mini-London, primarily based on exporting services. The capital’s economic power has been declining for nearly two decades, with output per worker actually lower today than it was before the financial crisis. That’s hardly a model which should be replicated. Fiscal devolution is not going to fix this. Instead, it will simply push responsibility for increasing growth in a broken system downwards. Rather than plain investment, devolved cities need a plan for separately enhancing constituent parts of the economy — not just finance like London.

The tragedy is that the Chancellor can see all this. She speaks passionately about investment-based growth and the failures of market whims. However, she cannot snap her fingers and change things. Worse still, she wants to put the power of the state on the current broken model, rather than transitioning to an alternative. As the world braces for the economic shock caused by the war in Iran, Britain needed more than steady as she goes. And Reeves certainly didn’t provide it.

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Andrew O’Brien is the former Director of Policy at the think tank Demos and currently Head of Secretariat of the Independent Commission on Neighbourhoods. He writes in a personal capacity.

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