UK's Starmer seeks to reassure business on commitment to generating growth

By Andrew MacAskill

LONDON (Reuters) -British Prime Minister Keir Starmer and finance minister Rachel Reeves met business leaders on Tuesday, seeking to hammer home their message that ministers had been told to refocus attention on economic growth with every major decision.

Starmer and Reeves held a meeting in London's historic finance centre with leading chief executives including Lloyds Banking Group's Charlie Nunn, BT's Allison Kirkby, Tesco's Ken Murphy and BAE Systems' Charles Woodburn, the government said.

At the meeting, Starmer said the government's "growth mission" was the driving force behind policy decisions as he announced plans to allow corporate pension surpluses that are worth more than 100 billion pounds ($124 billion) to be released and reinvested, Downing Street said.

"Growth is the number priority for this government, economic growth, wealth creation," Starmer said after the meeting.

Reeves is due to give a major speech on Wednesday where she will outline her plans to revive Britain's stagnant economy.

The speech will be closely watched after a rise in global borrowing costs earlier this month demonstrated how tight Britain's public finances are. This led to speculation that Reeves may need to cut spending or raise taxes to keep to her self-imposed rules limiting borrowing.

Reeves and Starmer promised voters ahead of last July's election that they would turn Britain into the fastest-growing Group of Seven economy.

But since the Labour Party took power, the economy has lost momentum with many employers blaming Reeves' first budget plan, which included an increase in the tax burden on businesses.

The new government plan will allow companies to reinvest pension surpluses back into their businesses or use the cash to provide better employee benefits, rather than being kept in safer but lower-return assets such as government bonds.

Downing Street said about 75% of corporate defined-benefit pension schemes are in surplus, worth 160 billion pounds, but restrictions have meant businesses have struggled to invest them.

A report by industry body Pensions and Lifetime Saving Association last year broadly supported more surplus sharing, but noted that surpluses could change as a result of market fluctuations.

($1 = 0.8017 pounds)

(Reporting by Andrew MacAskillEditing by Christina Fincher)