“All government grant funding has to demonstrate value for the taxpayer and unfortunately, despite extensive work from government officials, it has not been possible to achieve a solution,” said a Treasury spokesperson.

AstraZeneca said despite ditching its investment plans, its site in Speke would “continue to produce and supply our flu vaccine, for patients in the UK and around the world”.

It added that none of the current jobs at the plant would be affected.

On Wednesday, Reeves named AstraZeneca as one of the “great companies” as she set out her plans to kickstart economic growth, saying she was “determined to make Britain the best place in the world to invest”.

But shadow business secretary Andrew Griffiths said: “There’s no vaccine for incompetence.

“In the same week they talked about growth, Labour seem to have fumbled a deal with AstraZeneca, one of the UK’s largest companies and central to the critical life sciences sector.”

Labour has made boosting the UK economy its main objective in a bid to raise living standards but growth has remained sluggish.

The government has been trying to encourage more firms to invest in the UK and create new jobs.

Plans to expand AstraZeneca’s site at Speke had been set out by the previous Conservative Chancellor Jeremy Hunt in last March’s Budget.

But reports subsequently emerged that talks over the plans between the new Labour government and the company had run into delays.

Hunt called AstraZenca’s announcement an “absolute tragedy” and urged Reeves to “pick up the phone” to the company’s boss, Sir Pascal Soriot.

“If she believes in growth short term penny pinching cannot be the answer,” he wrote on X, external.

AstraZeneca’s decision was announced as some businesses brace for tax rises in April, with an increase in the rate of National Insurance that employers have to pay.

The threshold at which firms start paying National Insurance is also being lowered.

The chancellor has recently shifted her tone about the UK’s growth and investment prospects after she and Prime Minister Sir Keir Starmer were accused of negativity over the country’s finances.

But some companies have warned that the extra costs they face, along with minimum wage rises and a reduction in business rates relief, could impact their ability to hire workers and invest in growth.