UK Chancellor Rachel Reeves has backed plans for a third runway at Heathrow Airport, as she looks to boost trade and tourism and kickstart economic growth.

In a speech on Wednesday morning, Reeves declared that a third runway was “badly needed” and could create 100,000 jobs, lambasting how persistent delays have cast doubts about the UK’s seriousness towards improving its economic prospects

“The last full length runway in Britain was built in the 1940s. No progress in 80 years,” Reeves explained. “Why is this so damaging? It’s because Heathrow is at the heart of the UK’s openness as a country. It connects us to emerging markets all over the world, opening up new opportunities for growth.

“Around three quarters of all long haul flights in the UK go from Heathrow. Over 60 percent of UK air freight comes through Heathrow, and about 15 million business travelers used Heathrow in 2023 but for decades, its growth has been constrained. Successive studies have shown that this really matters for our economy.

“According to the most recent study from frontier economics, a third runway could increase potential GDP by 0.43 percent by 2050. 60 percent of that boost would go to areas outside of London and the South East in creating increasing trade opportunities for products like scotch whisky and Scottish salmon – already two of the biggest British exports out of Heathrow

“As our only hub airport, Heathrow, is in a unique position, and we cannot duck the decision any longer. I have always been clear that a third runway at Heathrow would unlock further growth, boost investment, increase exports, and make the UK more open and more connected. And now the case is stronger than ever, because our reforms to the economy, like speeding up the planning system and our plans to modernise UK airspace, means the delivery of this project has now set up for success.”

Following the Chancellor’s statement, the government has invited proposals on the expansion to be brought forward by the summer, before proceeding to a full assessment through the Airport National Policy Statement.

Reeves was clear that, throughout the development, ensuring value for money will be a key priority, with the cost of Heathrow’s expansion project estimated to be around £14 billion. The government’s proposal is that any associated costs will be financed through private funding, with the third runway also being delivered in line with legal and climate objectives.

Responding to the announcement, David Wells OBE, Chief Executive of Logistics UK, stated that the “announcement represents an intention which will be welcomed by our member businesses,” before adding that “the proof of the pudding will be in the speed at which planning decisions are taken and projects delivered.

“If nationally important projects like the third runway at Heathrow become a reality, we can deliver goods more efficiently across the country, benefitting everyone nationwide.

“Heathrow is the UK’s biggest port by value, and a critical hub which provides access to the rest of the UK and the world for British business – the opening of a third runway will expand the reach of industry to new global markets both for imports and exports.” 

Speaking on behalf of its members, Steve Parker, director general of the British International Freight Association (BIFA) said: “The Government’s backing for a third runway at Heathrow is certainly of interest to BIFA members that offer international logistics services for cargoes moving by air,  and although our members will still be wondering when any spade will hit the ground, they are ready to work with the airport authority on streamlining and improving services.

“Whilst we wait for a third runway, BIFA will focus on the airport’s cargo development. And on behalf of our members, BIFA is already working closely with the airport to support its ambitious plans to deliver a fundamental change to the way cargo operates at the airport. The latest plans and software enhancements were revealed last October. These plans would mean a significant redevelopment of the cargo estate set to commence in the next two to three years, as the airport looks to accommodate rising demand, modernise some ageing first-line cargo handling facilities, and improve cargo flows and efficiency.”

International Airlines Group, the parent company of British Airways, the UK flag carrier which has its main hub at Heathrow Airport also celebrated the decision.

History of the Heathrow expansion plans

2009 – The Labour government backed plans for a third runway at Heathrow Airport

2010 – The newly elected Conservative and Liberal Democrat coalition government scraps the expansion plans 

2015 – After years of debate about building a new hub airport in the South-East of England, a commission recommended the proposal to build a new runway at Heathrow.

2016 – The Conservative Party backs the Heathrow expansion plans, announcing a public consultation will be held

2019 – The High Court rejects four judicial reviews over the decision to approve the Heathrow expansion plans brought by local residents, councils, environmental groups and London Mayor Sadiq Khan

2020 – Activists secured a victory in the Court of Appeal, which ruled that the government’s decision was unlawful, as it neglected to consider its own climate obligations when green-lighting the project.

2020 – Heathrow wins its challenge in the Supreme Court to overturn the Court of Appeal’s ruling, paving the way for the expansion plans.

2024 – Heathrow Chief Executive Thomas Woldbye said the expected growth in passenger numbers post-Covid “firms up the business case” for building a third runway, and the expansion plans are “absolutely” something the airport will focus on.

2025 – Labour Chancellor Rachel Reeves backs the third runway plans at Heathrow, as well as supporting expansion plans at Gatwick Airport and Luton Airport.