Chancellor Rachel Reeves indicates she will overrule environmental objections to a third runway at Heathrow

Chancellor Rachel Reeves has indicated she will overrule environmental objections to a third runway at Heathrow in order to prioritise economic growth, a position likely to bring her into conflict with colleagues including energy secretary Ed Miliband.

Speaking as she began a 48-hour pitch to international investors at the World Economic Forum in Davos, Ms Reeves said she would back infrastructure projects even where they are unpopular.

The expansion of Heathrow has been debated for almost 20 years but despite the consistent support of business groups and a consensus it would boost economic activity, environmental and political objections have prevented it.

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Asked directly if she would now put the runway, along with expansion at Gatwick and Luton ahead of the UK's net zero commitments, Ms Reeves said: "I'm not going to comment on speculation, but what I would say is when the last government faced difficult decisions about whether to support infrastructure investment, the answer always seemed to be no.

"We can't carry on like that, because if we do, we will miss out on crucial investment here into Britain. You've already seen a number of decisions, including on Stansted and City Airport, on energy projects, on transport infrastructure, because we are determined to grow the economy."

The chancellor's trip to Davos comes with her economic program under increased scrutiny after a bumpy start to the new year, including a rise in borrowing costs and data showing the economy has stagnated since the election.

Business groups have also questioned the increase in employment costs in the budget, but Ms Reeves insisted the UK is competitive internationally, and has a strong case to make to international markets.

"If you look at the UK's taxation compared with countries around the world, we remain highly competitive, we have the lowest corporation tax in the G7. Amongst European countries, we have some of the lowest employment taxes, So Britain is an attractive place to invest."

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Ms Reeves also hailed the removal of the chair of the Competition and Markets Authority, a regulator regularly blamed for unnecessarily slowing down deals, as a sign she was serious about growth.

"We've got huge strengths as a country and this government is reforming the planning system, reforming the regulation system, making it easier for businesses to get things done, all with the purpose of making working people better off," she said.

UK not a target

The chancellor said she did not think the UK would be a target for tariffs threatened by president Donald Trump, largely because Britain has a trade deficit with America, and that she planned to meet the incoming Treasury secretary once he is confirmed.

"I believe in free and open trade, and I'll be making that case to my counterparts in the United States. I'm excited about the opportunity to work with the new Trump administration.

"Trade between the UK and the US is worth £300bn a year, a million Brits work for American firms, a million Americans work for British firms, so our economies are closely intertwined, and I look forward to enhancing and strengthening that relationship."

Privately some international investors and British company bosses in Davos have questioned the clarity of Ms Reeves's message, but she has received public support from significant companies.

Bill Winters, the chief executive of bank Standard Chartered, told Sky News: "I think the chancellor is doing the right thing in terms of putting the sign out that the UK is open for business.

"She's also made very clear statements about the fact that we're going to reduce some of the red tape set back to regulation in a way that's safe and sound. Exactly how that's going to work through, we'll see. So I'm encouraged, but obviously, she's got a huge, huge challenge."

(c) Sky News 2025: Chancellor Rachel Reeves indicates she will overrule environmental objections to a third runway at Heathrow