Labour spending review targets defence, NHS and infrastructure under tight constraints

Mace | 11th June 2025 | Policy & Think Tanks, Politics
British,Chancellor,Of,The,Exchequer,Rachel,Reeves,Attends,In,A

Rachel Reeves’ first spending review sets out Labour’s fiscal priorities, committing new funds to defence, the NHS and infrastructure projects like nuclear energy and housing. Despite limited headroom and rising borrowing, the review maintains capital investment while restricting departmental current spending, signalling tight fiscal control through 2029 without introducing new taxes.

Chancellor Rachel Reeves today unveiled Labour’s first multi‑year spending review, outlining more than £2 trillion in departmental allocations through 2029. The plan allocates substantial capital funding within the framework of revised fiscal rules while maintaining constraints on day‑to‑day expenditure growth. Reeves projected a modest 1.2 per cent annual rise in current departmental spending, with real‑terms increases confined to high‑priority areas including defence and health. Defence spending is earmarked to rise to 2.5 per cent of GDP by 2027, signalling an enhanced military budget that includes over £6 billion for submarine production and associated defence projects . The increase reverses earlier overseas aid cuts to allocate additional funding for security and capability, emphasising the government’s focus on national defence rather than external assistance . The National Health Service will receive a real‑terms boost of 2.8 per cent annually, amounting to an additional £30 bi...

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