Reeves revives UK's 'Silicon Valley' plan putting £78bn value on Oxford-Cambridge corridor

Chancellor Rachel Reeves believes the Oxford-Cambridge Growth Corridor “has the potential to be Europe’s Silicon Valley”, amid plans to unlock the potential of the arc that could add up to £78bn to the UK economy.

In a speech in Oxfordshire, Reeves said she will go “further and faster” to kick-start the economy.

She added that Britain’s economy has “huge potential” and is at the “forefront of some of the most exciting developments in the world, like artificial intelligence and life sciences.”

The chancellor said: “Oxford and Cambridge offer huge economic potential for our nation’s growth prospects.

ADVERTISEMENT

“Just 66 miles apart, these cities are home to two of the best universities in the world, two of the most intensive innovation clusters in the world, and the area is a hub for globally renowned science and technology firms in life sciences, manufacturing, and AI.

Read more: No trade off between financial stability and growth, warns Bank of England

“It has the potential to be Europe’s Silicon Valley. The home of British innovation.”

The government’s strategic plan for the arc centres on improving transport links and housing development between the two cities.

As part of the initiative, Reeves announced that the Environment Agency has lifted its objections to a major development around Cambridge. This will pave the way for 4,500 new homes, along with schools, leisure facilities, and office and laboratory space in the Cambridge city centre.

ADVERTISEMENT

She also confirmed new funding for transport upgrades, including East-West Rail services connecting Oxford and Milton Keynes, set to launch this year, and improvements to the A428 to reduce journey times between Milton Keynes and Cambridge.

“To grow, these world-class companies need world-class talent who should be able to get to work quickly and find somewhere to live in the local area. But to get from Oxford to Cambridge by train takes two and a half hours," she said.

“There is no way to commute directly from towns like Bedford and Milton Keynes to Cambridge by rail. And there is a lack of affordable housing across the region.

“Oxford and Cambridge are two of the least affordable cities in the UK. In other words, the demand is there but there are far too many supply side constraints on economic growth in the region."

Read more: FTSE and UK bond markets steady as Reeves unveils UK growth strategy

ADVERTISEMENT

This strategic focus on high-productivity areas forms part of the government's broader effort to stimulate economic growth.

In addition to the transport and housing developments, Reeves revealed a new Growth Commission for Oxford, inspired by Cambridge’s model, which will explore ways to unlock and accelerate growth in the city and surrounding area.

It forms part of the wider plan to bolster the ‘"golden triangle" science and technology clusters between Oxford, Cambridge and London.

Science minister Patrick Vallance said: “The UK has all the ingredients to replicate the success of Silicon Valley or the Boston Cluster but for too long has been constrained by short termism and a lack of direction.

“This government’s Plan for Change will see an end to that defeatism. I look forward to working with local leaders to fulfil the Oxford-Cambridge corridor’s potential by building on its existing strengths in academia, life sciences, semiconductors, AI and green technology amongst others.”

ADVERTISEMENT

Read more: Inheritance tax on pensions 'will heap more pressure on grieving families'

The UK government has been attempting to step up its AI push to boost economic growth, amid concerns that the country could fall behind in the global race to adopt this technology.

Prime minister Keir Starmer recently unveiled the government's AI Opportunities Action Plan, which included a commitment to set out plans to improve the UK's AI infrastructure.

The global AI race has been at the centre of financial news over the past week, with US president Donald Trump announcing the $500bn "Stargate" venture in his first few days back in office. The project involves private sector investment aimed at building AI infrastructure in the US.

However, the domination of US Big Tech was then challenged on Monday, as advancements by China's AI DeepSeek app rattled investors. DeepSeek develops open-source large language models and claims its recently released model offers "performance on-par" with the OpenAI o1 model.

These developments sparked concerns about the level of spending on AI by US major tech companies. As a result, certain stocks considered to be beneficiaries of the AI boom sold off heavily.

Chipmaker Nvidia fell by 17%, wiping $589bn (£473bn) off the AI chipmakers market value and marking the largest single-day loss in stock market history.

Read more:

Download the Yahoo Finance app, available for Apple and Android.