This was the Chancellor’s first full Spending Review and outlines the government’s priorities for public spending and capital investment through to 2030. With economic conditions continuing to challenge households and businesses, the government has focused on boosting key services and long-term infrastructure while avoiding immediate tax increases. However, with limited fiscal flexibility, further changes to taxation may be introduced later in the year.
A weaker economic outlook
The Office for Budget Responsibility (OBR) has revised the UK’s GDP growth forecast for 2025 down to just 1.0 percent, compared to 2.0 percent projected previously. Inflation is expected to average 3.2 percent during the year, and the cost of servicing public debt has increased significantly. Government borrowing is £9.8 billion higher than forecast, which places pressure on the Chancellor’s ability to meet future spending commitments without additional revenue.
Donna Branagan, Director at Branagans Accountancy Services, comments:
“While the decision not to raise taxes in this review will come as a relief to many, it is important that individuals and business owners stay alert. The Chancellor has left the door open for possible changes in the Autumn Budget. Now is the time to review your financial position and make sure you are planning effectively.”
The key spending commitments
- Healthcare: NHS funding will increase by 3 percent in real terms each year, providing an additional £29 billion by 2029.
- Education: Over 500,000 additional children will receive free school meals. A further £2.3 billion per year will fund urgent repairs to school buildings, alongside £2.4 billion for the rebuild of 500 schools.
- Policing: Police budgets will grow by 2.3 percent annually, with funding set to support the recruitment of 13,000 new officers.
- Local Government: Councils will receive a £3.4 billion uplift in core spending power, with a particular focus on adult social care and children’s services.
- Infrastructure: £113 billion has been allocated to capital investment over five years, including £39 billion for the delivery of 1.5 million affordable and social homes, and significant funding for energy, transport, and defence projects.
Planning ahead
David Branagan, Director at Branagans Accountancy Services, adds:
“This review outlines some much-needed investment in essential services and infrastructure. But it is clear that public finances remain tight. We encourage individuals and businesses to stay informed and get in touch if they need any help.”
If you are concerned about how the 2025 Spending Review could affect your personal or business finances, or would like help with tax planning or budgeting, contact Branagans Accountancy Services on 01709 327 215 or email info@branagans.co.uk.