Rachel Reeves pledges £2.5bn to stop UK tech firms moving abroad

Chancellor Rachel Reeves has pledged to stop the flow of British technology companies and scientific talent overseas, warning that the long-standing pattern of firms “drifting abroad” must end as part of a wider drive to revive UK economic growth.

Speaking ahead of a major speech to business leaders in London, Reeves said the government would invest £2.5 billion in artificial intelligence and quantum computing to strengthen the UK’s position as a global technology hub and ensure innovation starts at home rather than moving to markets like the United States.

The intervention reflects growing concern in government and industry that the UK is failing to retain its most promising technology businesses. While Britain continues to produce world-class start-ups and research, many end up moving overseas in search of deeper capital markets, favorable tax laws and strong institutional support.

Reeves, speaking at the National Center for Quantum Computing, said his economic strategy was designed to reverse that trend with what he described as a “strategic and proactive approach”, including targeted investment and regulatory stability and strong international relations.

Among that strategy is a significant bet on next-generation technology. Quantum computing, widely regarded as the next frontier of computing power, is expected to underpin progress in every field from chemistry to finance, while AI is already reshaping manufacturing, automation and decision-making across the economy.

Reeves is expected to argue that the UK could achieve the fastest rate of AI adoption in the G7, putting the country at the forefront of technological change that could define global competition for the next decade. He will also highlight the potential for quantum technology to generate up to 100,000 jobs, planning investment as an economic and industrial strategy.

However, the chancellor’s ambitions are met with an increasingly challenging economic climate. Increasing unrest in the Middle East has already caused a sharp increase in oil and gas prices, raising fears of renewed inflationary pressures and slowing growth, factors that could complicate government efforts to stimulate investment and innovation.

Reeves acknowledged the risks, noting that global energy security has become a major concern as disruptions to key supply routes, including the Strait of Hormuz, continue to reverberate through international markets. He confirmed that decisions on North Sea oil developments, including Rosebank and Jackdaw, would be made “soon”, although he stopped short of committing to boosting domestic production.

Instead, he outlined a comprehensive strategy for energy resilience, which includes close cooperation with European partners. Plans to deepen integration with EU energy markets are expected to be part of a wider post-Brexit reset aimed at reducing costs and improving stability of supply.

That approach extends beyond power to the realm of control. Reeves is expected to show a willingness to align the UK closely with EU rules in selected areas where it supports growth, jobs and investment. While the standardization of food and agriculture has already been proposed to reduce trade tensions, the speech may open the door to similar measures in sectors such as chemicals, manufacturing and advanced industries.

The prospect of close cooperation has drawn political criticism. Opposition figures say the strategy risks undermining the benefits of Brexit, with shadow chancellor Sir Mel Stride accusing the government of trying to “drag” the UK back into the EU instead of tackling domestic economic challenges.

Yet for business leaders, especially in the technology sector, the question is not conceptual but structural. The UK’s ability to retain high-growth companies has long been hampered by gaps in funding, pension fund participation and the perceived competitiveness of the London Stock Exchange compared to US markets.

Reeves’ intervention appears designed to address those concerns head-on, positioning the UK as a place not just to start a business, but to grow and globalize. By combining public investment, regulatory pragmatism and international cooperation, the government hopes to create an environment where British innovation can remain rooted at home.

Whether that ambition can be realized will depend not only on policy implementation but on the broader economic environment. With global instability, energy price volatility and global financial volatility at play, the race to keep up and scale tech businesses is becoming increasingly competitive.

Meanwhile, Reeves made it clear that the UK intends to play an active role in that race, and that allowing its most valuable companies to slip overseas is no longer an acceptable outcome.