Full text of Chancellor's Mansion House speech

Below is the full text of the Chancellor's Mansion House speech, which may be subject to amendment on delivery, expected at 9.10 pm. 

Lady Mayor, Governor, Ladies and Gentlemen

my thanks to the Lady Mayor for her address and to the City of London Corporation for hosting us here this evening

as well as to the Financial Secretary, Economic Secretary and the Chief Secretary to the Treasury for all the work they have put towards my address today

and to Gwyneth Nurse and her team at the Treasury for their tireless support.

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I have always been a firm believer that the success of our world-leading financial services sector is good for the whole of the UK

and I'm pleased to address you again this evening for the third time as Chancellor.

It was two years ago this month that this government was elected to office

and I was appointed Chancellor of the Exchequer.

This evening, I want to take the opportunity to reflect on the past two years: on the choices I have made, on Britain's economy today, and on the opportunities I see ahead.

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I'm proud to report that the British economy is strong:

At the start of this year, Britain had the fastest economic growth in the G7,

Last year, borrowing fell from 5.2% to 4.2% of GDP - its lowest level in six years,

Investment is up, productivity is up, and wages are up too,

Waiting lists are falling faster than at any time in the last 17 years

and half a million children will be lifted out of poverty during the course of this Parliament.

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If I had said two years ago that this is where we would be today, people would have doubted it

but we have proven the doubters wrong.

Through strength, resilience and determination, Britain has beaten the odds once again.

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Two years ago, I inherited an economy that was facing challenges on multiple fronts.

A public finance challenge spending over £100bn a year on debt interest

while capital investment was cut in favour of short-term fixes - projects promised, but no money committed to deliver them.

A public service challenge - school roofs crumbling, prisons overflowing and hospital waiting lists skyrocketing

and an economic challenge - anaemic growth, interest rates rising and the cost-of-living crisis weighing on the everyday lives of working people.

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Since the election, I have systematically addressed each of those challenges.

In my first Budget, I repaired the public finances, whilst setting out a path of consolidation to bring borrowing costs down

and at the same time, I made bold changes to the fiscal rules that meant at the Spending Review, I was able to invest an additional £120bn to restore our public services and build the housing, energy and transport infrastructure that is critical for economic growth.

At my second Budget, I built on these strong foundations to bear down on the cost of living

cutting inflation by taking money off energy bills, freezing prescription charges and freezing rail fares

and doubling our fiscal buffers to protect both household and public finances from increasingly common economic shocks.

The resumption of hostilities in the Middle East in the last few days has shown that our economic resilience will continue to be tested

and the market response to those changes shows that there is still work to do to insure our economy and our country against a volatile global landscape.

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Action to grow our economy and restore our public finances and public services has been underpinned by a new approach to building sustainable and resilient economic growth in every part of our country

an approach that I have called securonomics - an investment-led growth model for Britain

where an active and strategic state steps up to make conscious and deliberate choices

through stability in the public finances, investment in infrastructure and reform to our economy.

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This government has shown that change, indeed radical change, is possible

and the record of the last two years makes clear that governments can achieve that change only when they combine radicalism with credibility.

I had to earn that credibility in opposition, and I have proven it in government

in every action that I have taken since I became Chancellor.

That hard-won credibility must be sustained and the foundations maintained if this work of radical change is to continue.

In the past, radical governments without credibility have ultimately failed to win the trust necessary to deliver their agenda

and without radicalism, credible governments have found their credibility eroding when they are unable to satisfy the public's justified impatience for change.

The most successful [political content redacted] Governments have and must pursue the twin path of radical change and economic credibility.

The work of change has begun, and I am proud that the decisions that I have made as Chancellor provide a stable platform for the next Prime Minister to take our country forward.

***

I am optimistic about our country's potential

the economic future that is within our grasp.

But that future is not an inevitability

it requires choices.

That is why in my second Mais lecture earlier this year, I set out three big choices

to go much bigger and bolder in the areas which offer the greatest opportunities for Britain's growth, prosperity and security:

First, building growth in every part of our country breaking with the failed idea that prosperity can be built from only a few narrow parts of Britain,

Second, a concerted drive to make sure the jobs, industries and innovations of the future are built here in Britain

and third, confronting head-on the damage done by Brexit by building much deeper ties with our largest and closest trading partner the European Union.

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Britain should not be a country where opportunity and prosperity are confined to a few narrow regions

with other areas' potential untapped, their talent and resources wasted.

This is a long-standing weakness in the UK economy

and one where we are a clear outlier compared to our global counterparts.

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Since the election we have taken a new approach

increasing investment in regions across Britain

and taking steps to unwind the old model which hoarded too much power in London

with Whitehall taking a monopoly not only on where money is spent but on how it is spent.

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To boost regional investment, I have reformed the Treasury's Green Book our investment manual so every part of the country is given a fair hearing

and I have increased investment in city region transport, supported Development Corporations in our two growth corridors, and allocated money to new place-based funds to boost defence, innovation and creative clusters in our regions and nations.

***

Yesterday, I met with Mayors from across Britain.

Their frustration is familiar to me from sixteen years as a Leeds MP

of knowing the right priorities for your own area, but not being empowered to deliver them.

Here too, we have made progress.

This government has done more to devolve power in the last two years than its predecessors did over the last two decades:

Expanding integrated settlements so that more Mayors receive a single multi-year funding pot with flexibility to decide how money should be spent,

Introducing City Investment Funds, giving established regional leaders control over long-term, self-sustaining capital where returns can be re-invested for further growth

and giving Mayors the power to introduce an overnight visitor levy.

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But devolving real power means doing his at a much greater scale

and in my Mais lecture I set out the next major step:

Giving regional leaders control over a share of national taxes including income tax and business rates.

There is much further to go

but the steps I have taken put us on a path to a permanent transfer of power and resources away from central government

towards long-term investment, local accountability and regional leadership to create growth in every part of our country.

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Our economy is most successful when an active and strategic state partners with business to innovate and compete globally.

That is a fundamental principle of securonomics and of our industrial strategy:

Not shying away from technological change but stepping up and charting a path as our economy changes

and not allowing our industrial base to decay, leaving us exposed to volatile global supply chains

instead recognising that economic security is national security.

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That is why we stepped in to save British steel and prevent Britain's steel capacity being fundamentally undermined

so that our infrastructure, our industries and our security are not dependent on foreign imports.

That is why we are backing our world-leading defence sector

so that as defence spending rises across the word, the benefits of that investment and the jobs it will create come here to Britain

and that is why I have changed our procurement rules, so that government procurement is no longer a cheque for global incumbents but a launchpad for British business

ensuring we can buy British when it is critical to our national security  for steel, for shipbuilding 

and now for AI.

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AI is the defining technology of our generation.

It will be critical to our national security and to our economic future.

I am clear that the role of the active and strategic state is not to step back from the challenges this new technology presents

but to step up - embracing the opportunities of AI while guarding against the risks.

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That means having a serious plan on AI sovereignty, backing UK companies to win at critical positions in the AI stack:

Through our Sovereign AI unit, through our AI hardware plan, through our advanced market commitment on quantum

and through our new AI Economics Institute

so that the jobs of the future are created here in Britain.

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Financial Services is already at the cutting edge a sector that is leading the way in embracing new technology and innovating to compete around the world.

Today, I am publishing the recommendations of the Transatlantic Taskforce on Markets of the Future that I launched with Secretary Scott Bessent last year

and I am publishing an update on our progress in the last year against the Financial Services Growth and Competitiveness Strategy.

We have one of the best stablecoin regimes in the world,

The Great British Tokenised Deposit initiative is now moving to pilot transactions,

From today UK businesses can access new AI payment tools - with Mastercard choosing the UK as the first place in Europe to launch new agentic payments,

and I can announce today that by early next year, the UK is set to become the first G7 country to issue a Digital Sovereign Bond, with plans for further issuance to come.

***

The success of the Financial Services sector is built on the deep strengths of our economy

with world-leading universities, cutting-edge research capability and one of the most vibrant start-up ecosystems anywhere in the world.

We must go further to achieve the same success in other sectors

supporting the small and medium sized businesses that are the backbone of local economies in every part of our country

...and making the UK the best place in the world to start, scale and stay.

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Since becoming Chancellor, I have reformed financial regulation, setting out proposals for changes to ringfencing rules

...and I asked the Financial Policy Committee to review bank capital requirements.

The results of that review published last week are estimated to mean up to £150bn of additional lending

with Nationwide alone lending an additional £40bn in mortgages and to SMEs because of the changes that I have made.

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I am turning Britain's savers into investors through changes to ISAs and to financial advice,

Last year, our largest pension funds invested an additional £10 billion into private markets because of the changes I have made...

and insurers are well on the way to delivering their £100bn investment pledge, with £17bn invested into UK assets to date.

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And I have boosted SME lending including through the changes I announced yesterday in Gateshead to help businesses grow, invest and create jobs

launching a new UK Export Finance guarantee scheme, to help small businesses to start exporting

and expanding the highly successful Growth Guarantee Scheme from the British Business Bank

more than doubling the SME lending that it will support to £3.5bn per year

and increasing the number of businesses supported from 8,000 to 20,000.

Lloyds, Natwest and Allica Bank have already confirmed that these changes will help them to provide £1 billion each of SME lending over the next 3 years

And I am grateful to Paul Thwaite and Charlie Nunn for driving forward this vital work.

This is a crucial pillar of our growth strategy - backing British business to innovate, export, grow and succeed.

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In our age of insecurity, the economic strength of our country will rest on strategic alliances

and no alliance is more important than our relationship with the European Union.

Last week, I attended Eurogroup, where I met with Commissioner Albuquerque, and I am pleased to have John Berrigan from the Commission here tonight.

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I have always been clear about the damage that Brexit did to our economy.

Britain's future is inescapably bound with that of Europe

our largest trading partner, with whom we share common interests and common values.

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We have already made significant progress:

Participation in Horizon Europe is supporting the development of cutting-edge technology,

We are set to rejoin the EU's Erasmus scheme next year

and yesterday the PM announced an agreement on the UK's participation in the EU's 90bn loan to Ukraine

which will strengthen our defence links and our defence industrial base.

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I want to see the next UK-EU summit rescheduled as soon as possible

so that we can finalise ambitious agreements on agrifoods, emissions trading, electricity and a Youth Experience Scheme.

But I think that we need to be much bolder and go much further

moving towards a trusted economic and security partnership, where the default is the UK is included not excluded

recognising that in the majority of cases, that will be the approach with the greatest benefits for Britain.

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To achieve that, it will be incumbent on those of us who believe in Britain's relationship with Europe to make the argument

and to demonstrate the positive difference it will make to the British people.

I am grateful for the support of many in this room in championing a policy of greater EU cooperation and integration.

Reduced burdens for businesses,

Lower costs for consumers,

Greater opportunities for our young people

and a more resilient economy with our energy systems, national security and supply chains buttressed against a volatile global landscape.

The prize for Britain of a closer relationship with Europe is immense.

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I am proud of what this government has achieved since the electin:

We have restored economic stability putting our public finances on a secure path,

We have invested in our public services and in economic growth - in transport, in nuclear and in housing

and we have reformed our economy so that it works better for working people - sweeping away our antiquated planning system and striking trade deals with countries around the world.

The result is an economy that is stronger, with wages rising, and child poverty falling.

Through the choices I have made I have fixed the foundations

and I have begun the work of building secure and sustainable growth in every part of our country

where an active and strategic state steps up to empower our regional leaders, back British business and deepen our relationship with the EU.

***

Radical change is only possible if it comes with credibility

Radical change without credibility does not endure

.and credibility cannot be sustained without delivering change that meets the moment.

Radical change is only possible if it comes with credibility.

That is my mission as Chancellor.

That is the mission of this government.

And I know it will remain the mission of the next.

Thank you.