British Finance Minister Rachel Reeves is set to announce the allocation of over £2 trillion ($2.7 trillion) in government spending on Wednesday, in a speech aimed at promoting a sense of national revival and outlining the Labour government’s political priorities after one year in office.
Speaking to Parliament shortly after 11:30 GMT, Reeves will present detailed budgets for government departments covering the years 2026 to 2029, along with investment strategies extending through to 2030.
Reeves had previously outlined the total spending amount in an October budget, funding her proposals through the largest tax increase in a generation and easing fiscal restrictions to allow more borrowing for long-term investments.
The spending decisions unveiled on Wednesday are expected to show early results if Labour is to meet its targets of boosting the UK’s economic growth and enhancing the quality of under-pressure public services.
“This government is working to renew Britain. Yet, I understand that many people across the country have not yet felt these changes,” Reeves is anticipated to say, according to excerpts released by the Treasury.
She emphasized the government’s commitment to “investing in our country’s security, health, and economy so that working people everywhere are better off.”
Among the initiatives expected to be announced is a £39 billion, decade-long program to build more affordable housing — nearly doubling current annual spending levels on such projects, according to the Treasury.
Since Labour’s decisive election win last July, its popularity has waned. The right-wing Reform Party, led by former Brexit campaigner Nigel Farage, currently leads in some polls and outperformed Labour in recent English local elections.
Although the UK’s economy posted the fastest growth among G7 nations in the first quarter of this year, the International Monetary Fund predicts that in coming years the UK will lag behind the US and Canada and only slightly outpace the eurozone.
Official figures released Tuesday showed unemployment reaching its highest point in nearly four years. The Conservative opposition blamed Reeves’ October budget, which placed much of the tax burden on employers and expanded workers’ rights.
Debate Over Spending Allocation
Reeves and other ministers have been negotiating this week over the distribution of funds across departments, within the spending total set last year.
Plans announced so far include £86 billion for research and development, £16 billion for public transportation, £4 billion for a new nuclear power plant, £6 billion for nuclear submarines, and £4 billion for prison infrastructure.
The spending increases are expected to be uneven. The Institute for Fiscal Studies (IFS) notes that Starmer’s February announcement to boost defense spending to 2.5% of GDP means other departments may see little or no real increase in investment pace beyond this year.
Day-to-day spending on public services is forecast to grow by an average of 1.2% annually above inflation from 2026-27 to 2028-29, while capital expenditure is set to rise by 1.3% annually in real terms through 2029-30, the IFS said.
Both growth rates are much slower than this year, when investment spending is expected to jump by 11.6% and current spending by 2.5%.
To increase the health budget by 2 percentage points above the average — as was common when Labour last governed before 2010 — would require other departments to face real cuts of around 1% annually, the IFS added.
Chris Jeffery, head of macro strategy at Legal & General, the UK’s largest asset manager, said the known overall spending total limits investor reaction. Instead, markets will focus on whether the proposed budget cuts are realistic.
“If the cuts in real spending are very steep, markets may doubt whether they can be implemented. Less aggressive cuts would seem more credible,” he explained.
