UK Chancellor Rachel Reeves has set out a package of regional funding and industrial strategy measures, including two new artificial intelligence growth zones in Wales and targeted investment to strengthen the UK’s external market position.
The zones, which the Treasury says will create more than 8,000 jobs, are accompanied by £17 million in funding for Northern Ireland aimed at boosting trade and industrial capacity. Reeves said the government was shifting procurement rules to allow the UK to buy British in cases involving national security, with a particular focus on artificial intelligence.
“We have changed government procurement, so we can buy British when it is crucial to our national security, including today for AI, driving innovation and building that great industry here in Britain,” the Chancellor said.
Reeves confirmed £13 billion in flexible funding for local and regional leaders to support skills development, business growth, and infrastructure, arguing that devolved economic decision-making remained central to the government’s strategy.
“These budget measures are the right choices for a fairer, a stronger, and a more secure Britain,” she said.
The announcements come as the Office for Budget Responsibility reports improving economic indicators. After cutting the GDP growth forecast earlier this year from 2% to around 1%, the OBR now expects growth of 1.5%, citing stronger-than-expected economic momentum.
The Budget also extends business rates retention for West England, the Liverpool City Region, and Cornwall until 2029. Additional defence spending will be directed towards hubs in Portsmouth, Barrow, and Plymouth, with further backing for Team Derby and other regional defence clusters.
Reeves reaffirmed commitments to major transport and rail investment, maintaining the extra £120 billion allocated at the last spending review. Projects include the Lower Thames Crossing, expansions to city-region transport networks, the Midlands Rail Hub, and upgrades to the TransPennine Route.
The Chancellor also reiterated support for the Northern Growth Corridor, notably Northern Powerhouse Rail, stressing that improved connectivity was key to long-term regional productivity.
John Lucey, VP EMEA at Cellebrite, said AI adoption in the public sector, particularly policing, would be critical for managing increasing data volumes. “AI and automation are essential to streamline time-consuming tasks such as reporting and data analysis to save hours and millions in efficiency,” he said, adding that human oversight remained essential for public safety applications.
Stuart Harvey, CEO of Datactics, argued that the UK must pair AI investment with stronger data governance. “Without robust systems to manage, analyse, and secure data, businesses and government departments risk falling behind in an increasingly competitive global market,” he said.
Blake Richmond, CEO at Resonate Group, welcomed the continued focus on rail investment and affordability. Freezing rail fares, he said, supported workers and strengthened local economies. He added that investment in data technologies and AI would modernise the rail industry and support long-term regional development.
Sheila Flavell, CBE, COO of FDM Group, said the decision to scrap the two-child benefit cap would help parents return to work. “This will ease the burden on families and open doors for parents who simply need the right support and flexibility to re-enter the tech sector,” she said, pointing to the company’s Returners Programme as a pathway back into employment.
