Today [11 June 2025], HM Treasury published its much-anticipated 2025 Spending Review, setting out the UK government’s plans to ‘invest in Britain’s renewal: its security, health and economy’.
The document sets departmental budgets for day-to-day spending until 2029, and until 2030 for capital investment. Presenting the Spending Review, chancellor of the exchequer Rachel Reeves outlined plans to increase total departmental spending by 2.3% over inflation each year.
Speaking in the House of Commons today, Reeves said: “We are renewing Britain. But I know that too many people in too many parts of this country are yet to feel it.
“This government’s task, and my task as chancellor, and the purpose of this Spending Review is to change that – to ensure that renewal is felt in people’s everyday lives, in their jobs, and on their high streets.
“The priorities of this Spending Review and the priorities of working people – to invest in Britain’s security, in Britain’s health, and to grow Britain’s economy so that working people are better off.”
Amongst the announcements in the Spending Review were a 3% annual rise in NHS spending and a £39 billion investment in affordable housing, as well as a number of announcements that could affect UK supply chains – these are outlined below.
Clean power initiatives
The Spending Review 2025 addresses plans to ‘make Britain a clean energy superpower’ – one of the five key missions outlined in the Labour government’s ‘Plan for Change’. HM Treasury has allocated £14.2 billion to funding Sizewell C, which it describes as ‘the first state-backed nuclear power station since Sizewell B began construction in 1988’.
Additionally, over £2.5bn will be invested into enabling one of Europe’s first Small Modular Reactor (SMR) programmes, and the same amount will be invested in nuclear fusion, including support for the UK’s programme to design and build a prototype energy plant in Nottinghamshire.
Furthermore, the Spending Review confirmed the allocation of £9.4bn to carbon capture, usage and storage (CCUS) and the commitment of £2.6bn capital investment to decarbonise transport from, including £1.4bn to support the continued uptake of electric vehicles, including vans and HGVs, and £400 million to support the rollout of EV charging infrastructure.
The air cargo sector is also set to benefit, with the Spending Review confirming government plans to support the production of Sustainable Aviation Fuel in the UK by extending the Advanced Fuels Fund.
Transport and infrastructure spending
By 2032, £15.6bn is set to be invested through the new Transport for City Regions (TCR) settlements to give the mayors of some of England’s largest city regions long-term transport settlements.
The government confirmed that it will publish its ’10-Year Infrastructure Strategy’ later this month. This will set out a long-term plan for how infrastructure projects are planned and delivered, as well as ‘a new approach to infrastructure, providing certainty and stability to industry, reforming institutions and removing barriers to delivery’.
Investment in technology
The Spending Review also sets out plans for a £1.2bn investment in digital technologies and AI across public services, including in the NHS. The government says it will ‘build strong digital and technology foundations, tackle urgent cybersecurity and technical resilience risks, modernise public service delivery and drive a major overhaul in government productivity and efficiency’.
Research and development support
The government says it has prioritised research and development (R&D) in this Spending Review, increasing R&D funding to £22.6bn per year by 2030. It claims that on average, every £1 of government spending will deliver £7 of economic benefits in the long term.
Science, innovation and technology projects will have the most capital available to them for funding, representing £15.2bn of the £22.6bn annual funding total set to be available by 2030.
Industry reaction
Several key figures in the logistics and supply chain industry have already commented on the Spending Review. Kevin Green, policy director at business group Logistics UK, said: “Nothing, including the economy, moves without logistics. It underpins every sector that our communities and businesses rely on, every day – from keeping the shelves stocked to managing supply chains. It is what turns building sites into houses, houses into homes, and homes into communities where people can live and work.
“The Spending Review makes some bold pledges for transport, power generation, defence, healthcare and home building, with transport capital investment to rise 3.9% across the Spending Review period. To turn these pledges into economic growth, it is vital that the government prioritises the logistics sector through the upcoming Industrial, Trade and Infrastructure Strategies – both by providing the infrastructure our sector needs to move goods efficiently, and by enabling our sector to efficiently deliver the country’s renewal that the chancellor has committed to.
“It is why 30 CEOs of some of the UK’s biggest businesses recently wrote to [secretary of state for business and trade] Jonathan Reynolds, requesting that logistics is included as a foundational sector in the forthcoming Industrial Strategy.”
Green raised concerns about where this additional funding will come from: “While we welcome the Spending Review in principle, we, along with our members, are making clear to the chancellor that this investment cannot be funded by higher taxation on hard-pressed businesses.
“Increases in employers’ National Insurance Contributions are costing our sector an estimated £1.7 billion, and our members simply cannot afford any more whether this is through fuel duty or other business taxes. It is SMEs that power the UK economy and they will be forced to pass on any cost increases which will drive inflation and hamper growth.”
This is a criticism that Reeves has faced today from shadow chancellor Mel Stride. The Conservative MP described his Labour counterpart’s attitude towards government spending as “spend now, tax later”, accusing Reeves of having “completely lost control”, and saying the Spending Review is “not worth the paper that it is written on”.
Sharing his thoughts on the 2025 Spending Review, Dr Lee Elliott, head of global occupier research at real estate firm Knight Frank, said: “Today’s Spending Review fires the starting gun on a new investment cycle – with big business poised to benefit from £113bn in capital spending, including funding for transport, housing, defence and nuclear.
“The headline commitments – from Sizewell C to urban rail upgrades – send a clear signal on growth and national renewal. Defence contractors, infrastructure firms and clean tech players will see opportunity in the detail. But with day-to-day departmental budgets rising just 1.2% in real terms, tax policy left hanging, and a volatile global environment defined by trade tensions and supply chain fragility, the long game remains uncertain.
“Delivery risk, payment delays and fiscal tightrope-walking could blunt private sector confidence. The government is betting big – but business knows the balance sheet still bites.”
