Does Labour’s spending review signal a return to austerity?

Rachel Reeves says the significant rise in capital spending will offset the impact of reduced day-to-day spending for some departments. Photograph: WIktor Szymanowicz/NurPhoto/Shutterstock

Rachel Reeves usually avoids any mention of the word “austerity” in connection with her fiscal policies, but on Wednesday, she decided to tackle the argument head on.

“In this spending review, total departmental budgets will grow by 2.3% a year in real terms,” she told MPs as she announced the next stage of her spending review.