UK Spending Review 2025 and the Impact on Different Sectors

On 11 June 2025, Chancellor Rachel Reeves delivered a landmark Spending Review, where she pledged to increase departmental spending by 2.3% per year in real terms. An additional £190 billion is to be allocated to public services, sectors such as healthcare, transport and housing are poised to benefit significantly.

For both businesses and communities, the government’s message is clear: this is a long-term plan to drive growth by strengthening essential services, modernising infrastructure, and accelerating regional development. If delivered successfully, it should help revitalise the UK economy, while also rebuilding public trust in government investment after years of tight budgets and austerity.

Impacts on Different Sectors

Many sectors were explicitly stated by the Chancellor in her spending review, including healthcare, transport and logistics and the property sector. Below, we summarise the key changes announced by Rachel Reeves, and how these are expected to impact these sectors.

Healthcare

• NHS Funding Boost: £29bn annually, including a 3% real-term increase to help reduce waiting times and modernize services.
• Digital Health Investment: £10 billion investment in digital infrastructure, including the NHS app

Read our article on how the healthcare sector is impacted by the Spending Review for a deeper insight into how the healthcare sector is likely to be impacted by the Chancellor’s spending updates.

Transport & Logistics

• Investment in rail, airports and buses
• £400m+ investment into Welsh rail projects
• Increase in local transport grants for areas outside London
• 4-year spending deal for Transport for London
• £3.5bn allocated for the TransPennine Route upgrade
• £2.5bn allocated for the East-West rail project

Read our article on how the transport & logistics sector is expected to benefit from the Spending Review for more detail on how this sector is going to benefit from the changes.

Property & Construction

• Affordable Housing: £39bn over the next 10 years to build social and affordable homes (nearly doubling the prior investment)
• £13.2bn fund to fix draughty homes and install heat pumps and solar panels (which should save individuals £600 per year in bills)

Read our article on how the property & construction sector is expected to benefit from the Spending Review for more details about how this sector is likely to benefit from the Chancellor’s update

Other Spend Increases

Rachel Reeves has also pledged to increase spending in these areas:

• Defence (increased spending on defence and security)
• Immigration and Asylum (up to £280m more per year for border security)
• Energy (£30bn in investment in nuclear power)
• Entrepreneurship and Business (£2bn more for investment in AI, and up to £1.2bn a year for skills training for young people)
• Local amenities (£350m for facilities such as parks, libraries and swimming pools in a series of towns)
• Police and Prisons (spending increase of 2.3% per year in real terms as well as £7bn to finance 14,000 new prison places)
• Schools (£2.3bn a year to fix and maintain existing schools, along with £2.4bn to build new schools. Alongside this is confirmation of no plans to end the two-child benefit cap for free school meals, and £370m for school-based nurseries to provide breakfast clubs)

How does this affect other sectors?

Manufacturing & Engineering

• Defence Spending: the £11bn injection into the military is likely to increase demand for British-made defence equipment and technology.
• Energy & Infrastructure Projects: Manufacturing firms may need to supply materials or components for nuclear reactors, transport works & housing projects.

Agriculture

• Infrastructure improvements: Enhanced transport links across the UK will ease distribution burdens for rural producers.
• Energy: If energy and nuclear expansion reduces overall energy costs, the running costs of agricultural operations are likely to reduce.

Charity

• Childcare, Housing & Free School Meals initiatives: Alleviating the pressure on low-income families could reduce demand for crisis support, allowing charities to focus more on developmental work.
• Skills training for young people: Will help increase employability of young people across the country, leading to less unemployment, which in turn should help reduce poverty and homelessness in future.

Leisure & Hospitality

• Transport upgrades: easier access to tourism destinations could increase domestic leisure travel and associated spending.

Final Thoughts

There are some significant spending pledges that have been put forward by the government which raises the question of whether this is a precursor to increased government spending in other areas going forward. The main concern will be how these will be funded and whether further substantial tax rises will be required in the Autumn Statement. The fact that the current economic outlook is looking weaker than forecast strengthens the possibility of either tax rises, welfare cuts or a combination of the two.