UK chancellor Rachel Reeves has delivered the government’s spending review, setting out its plans and priorities for the next three years. The aim of the review is of course to allocate spending over that time period – but this government is keen for economic growth and so has directed the funds to try to boost GDP. This approach could work but is particularly challenging in an uncertain global environment.
The parameters of the UK’s fiscal policy were set in the budget last October and the spring statement in March when the chancellor confirmed her fiscal rules, which allowed borrowing only for investment. Day-to-day spending on public services like the NHS and schools has to be met by tax revenues.
As a result of an earlier tweak to the fiscal rules, public investment – spending on things like roads and hospitals – will total about £113 billion from now until nearly the end of this parliament.
