“This Government’s task, my task as Chancellor and the purpose of this spending review, is to change that,” she added.
Under pressure from the U.S. and NATO to increase defense spending to a potential 5% of GDP, Reeves on Wednesday announced that defense spending will now rise to 2.6% of GDP by April 2027.
On Wednesday, Reeves announced what she described as “a record cash investment in our NHS” increasing real-terms, day-to-day spending by 3% per year for every year of the spending review.
No fiscal announcements The Spending Review is not a fiscal event, meaning there will be no announcements on taxation or borrowing on Wednesday.
The opposition Conservative Party lambasted Reeves’ spending review after it was delivered, with the party’s rival finance chief Mel Stride saying it was “not worth the paper that it is written on.”
Getty Images | Getty Images | Anadolu.
U. The K. On Wednesday, Chancellor Rachel Reeves will present the government’s Spending Review, and everyone will be watching to see how billions of pounds in public funds are distributed among various departments and infrastructure initiatives.
We already know that “protected departments” like defense and health will receive significant funding increases, but winners may emerge among “unprotected” units.
Budgets for departments like the Home Office, those in charge of local government, and those that deal with the environment may be squeezed as the government looks to reduce expenses.
At 12:30 pm, Reeves began presenting her Spending Review to the British parliament. m. London time, and as soon as the headline announcements are made, we’ll update this story.
In her opening remarks, Reeves told lawmakers, “We are renewing Britain.”.
“It is the responsibility of this Government, my role as Chancellor, and the goal of this spending review to change that,” she continued.
The announcement that is being made.
The review addresses two distinct spending streams: capital expenditure for the next four years, which funds the construction of new roads, hospitals, and military hardware, and resource expenses, which cover the government’s ongoing operating and administrative costs for the next three years.
The Treasury has previously stated that daily spending will increase by an average of 1.2 percent over the next three years, while investment (capital) spending will increase by 1.3 percent annually over the next four.
Prior to the review, the Institute for Fiscal Studies (IFS) think tank cautioned that “sharp trade-offs are unavoidable” due to the “relatively modest” increase in daily and investment spending.
Prior to Wednesday’s spending announcement, the government has already made a number of announcements outlining some of the funds that will be allocated to various government departments, from education and defense to science and housing.
Here are Reeves’ announcements to lawmakers on Wednesday, along with what we already knew.
Protection.
The government has previously declared that it will increase defense spending from 2 percent of GDP to 2 percent of GDP by 2027. This increase will be partially financed by reductions in the budget for foreign aid.
In response to pressure from the U. S. Reeves declared on Wednesday that defense spending will now increase to 2–6% of GDP by April 2027, ahead of NATO’s proposed 5% increase.
The U. K. . ‘s defense plans include increasing the production of drones, missiles, and munitions, building 12 new nuclear-powered attack submarines, and strengthening cyberwarfare capabilities.
Wellness.
We were waiting to see the full extent of the funding boost that the National Health Service (NHS) received, but it was also expected to receive a significant boost as one of the government’s primary spending priorities after defense.
For each year of the spending review, Reeves described Wednesday’s announcement as “a record cash investment in our NHS” that would raise real-term, daily spending by 3% annually. She claimed that equates to an additional £29 billion annually for the NHS’s daily operations.
N. Leon/Getty Images.
science and technology.
In the run-up to the announcement on Wednesday, the Treasury has already hinted at a number of significant infrastructure investments, announcing that it will set aside £86 billion to support research and development in the science and technology sectors over the next four years in an effort to spur innovation and growth.
According to the government, the funds will support research on everything from “new drug treatments and longer lasting batteries to new AI breakthroughs.”.
accommodation.
In the spending review, Rachel Reeves will reveal a £39 billion increase in funding for social and affordable housing, the Treasury said Tuesday evening. A major annoyance for many voters who are having trouble finding affordable housing is access to state-subsidized social housing, or affordable new homes.
Schools.
Additionally, more than 500,000 children whose parents receive Universal Credit—a welfare payment available to those who are low-income, unemployed, or unable to work—will be eligible for free school meals in schools. In the past, children living outside of London could only receive free school meals if their annual household income was less than £7,400.
Police and Justice.
Reeves declared that the government would invest up to £700 million annually in reforming the probation system and announced a £7 billion investment to finance 14,000 new prison spaces.
Getty Images | AFP | Adrian Dennis.
During the spending review period, she promised to raise police spending power by an average of 23.3 percent annually in real terms, which would amount to over £2 billion over the following few years. In England and Wales, she said, an additional 13,000 police officers, police community support officers, and special constables will be assigned to policing duties.
Move around.
A £15 billion funding boost will be given to transport networks outside of the capital, London, with an emphasis on the North and Midlands regions of the nation.
With Reeves announcing a four-year settlement for the Transport for London network “to provide certainty and stability for our largest local transport network to plan for the future,” London has not been forgotten. “By the end of this parliament,” she added, “local transport grants [capital grants] should be increased fourfold.”.
Nuclear power.
The government has announced that it will spend around £14 billion on the construction of the new nuclear power plant, Sizewell C, and £20.5 billion on smaller modular reactors. “Deliver clean power to millions of homes, cut energy bills, and boost energy security,” it said, adding that the action would also generate 10,000 jobs. “,”.
No fiscal news.
Since the Spending Review is not a fiscal event, Wednesday will not see any announcements regarding borrowing or taxes.
Reeves announced increased public spending, tax increases, and changes to fiscal regulations that would enable her to borrow money for longer-term investments when the government announced its budget, debt, and deficit goals for the upcoming year last fall.
However, we are aware that Reeves wants to adhere to the “fiscal rules” that were outlined in her Autumn Budget last fall. She also wants debt to decline as a percentage of U.S. government revenue and daily expenditures to be financed by tax revenues rather than borrowing, giving her about £9 billion in “fiscal headroom” to reach that goal. K. . GDP by the end of 2029 or 2030.
Reeves doesn’t have much of a financial cushion because of those strict fiscal regulations. K. . If economic growth stalls, or if borrowing costs return to the levels we observed at the beginning of the year. Amid the pressure of increased public spending, economists anticipate that the next Autumn Budget will include additional tax increases.
When Reeves’ spending review was delivered, the opposition Conservative Party blasted it, with Mel Stride, the party’s rival finance chief, calling it “not worth the paper that it is written on.”. “.
Stride referred to her review as a “spend now, tax later” strategy and stated that the Treasury would announce extra tax increases in the fall.
