UK Chancellor Rachel Reeves is set to announce Labour's spending review on Wednesday, outlining day-to-day spending plans for the next three years and a £113bn capital funding boost over four years. While health and defence will see significant increases, other departments may face squeezes, and economists anticipate future tax rises due to high borrowing costs and sluggish growth.
Labour’s spending review: five charts underpinning Rachel Reeves’s decisions
Spending review 2025Rachel ReevesEconomic policyTax and spendingPoliticsLabourEconomicsHealth policyDefence policyInfrastructureBusinessPublic services policyUK
AI Summary
TL;DR: Key points with love ❤️UK Chancellor Rachel Reeves is set to announce Labour's spending review on Wednesday, outlining day-to-day spending plans for the next three years and a £113bn capital funding boost over four years. While health and defence will see significant increases, other departments may face squeezes, and economists anticipate future tax rises due to high borrowing costs and sluggish growth.
Trending- 1 1950s: Military spending began a steady retreat ('peace dividend').
- 2 2000: The last time a spending review was announced without a budget (under Gordon Brown).
- 3 2010s: George Osborne oversaw deep cuts (austerity).
- 4 October (previous year): Rachel Reeves set out her plans for total spending at the budget.
- 5 Past year: Borrowing costs for governments have risen sharply.
- 6 May (current year): The yield on long-term UK government debt rose to 5.2%.
- 7 Wednesday (this week): Rachel Reeves will announce her highly awaited spending review.
- 8 By 2027: Keir Starmer's promise to spend 2.5% of national income on the military.
- 9 By 2028: Wes Streeting’s health department is expected to receive a 2.8% real-terms rise in annual day-to-day expenditure, amounting to £30bn a year extra.
- 10 Next four years: £113bn boost in capital funding.
- 11 Next parliament: Ambition to hit 3% military spending.
- Increased spending on health and defence
- Potential squeeze on resources for other government departments
- Increased national debt due to borrowing for capital projects
- Economists anticipate future tax rises to balance day-to-day spending with tax receipts
- Increased scrutiny and speculation before the autumn budget
- Potential impact on market confidence due to tight fiscal situation
What: UK Chancellor Rachel Reeves will announce Labour's spending review, detailing day-to-day spending plans for the next three years and a £113bn capital funding boost over four years. The review aims to invest in national security and public services and reboot the UK economy.
When: Wednesday (this week) for the announcement. Day-to-day spending plans cover the next three years up to the next general election, and capital budgets cover a further year. The article was published on June 11, 2025.
Where: UK, specifically the House of Commons.
Why: The review aims to fulfill Labour's manifesto promise of 'no return to austerity', invest in national security and public services, and reboot the UK economy. It also reflects pressure to increase NHS and welfare spending due to the UK's ageing population, and to meet defence spending targets.
How: Reeves will announce an average annual real-terms increase of 1.2% for departmental budgets over three years and 1.3% for capital spending over four years. This includes substantial boosts for the health department (£30bn extra annually by 2028) and defence (to reach 2.5% of national income by 2027). The capital spending is funded through borrowing after changes to fiscal rules.