Reeves unveils 2025 Spending Review to kick-start UK economic growth

Chancellor Rachel Reeves today unveiled the government’s 2025 Spending Review (SR25), pledging a bold £120 billion boost in capital investment to “kick-start economic growth” and drive the UK’s long-term economic recovery.

The package includes a raft of measures designed to power innovation, housing, infrastructure, and industry, while staying within revised fiscal rules set out at the Spring Statement 2025.

The Spending Review outlines day-to-day spending plans for the next three years and capital plans extending through to 2029–30. Reeves emphasized that the review is “laser-focused” on growth, unlocking billions in strategic investment and accelerating delivery timelines to stimulate immediate and long-term economic momentum.

£120 billion capital boost

The government had already committed to a £107 billion capital increase at the Autumn Budget 2024, followed by an additional £13 billion in the Spring Statement earlier this year. The Spending Review allocates this full £120 billion uplift, without breaching overall capital spending limits, by reprioritising and advancing £3.3 billion into 2026–27 to drive faster delivery.

Major growth-focused investments

A series of capital allocations underscore the government’s economic strategy:

£15.6 billion for long-term Transport for City Regions (TCR) settlements, giving metro mayors the tools to transform urban transport infrastructure.
£39 billion over a decade for a new Affordable Homes Programme, with annual spending rising to £4 billion by 2029–30.
£14.2 billion for Sizewell C, the UK’s first state-backed nuclear power station since 1988, as part of a £30 billion nuclear energy drive.
£22.6 billion annually by 2029–30 for research and development, supporting the government’s modern Industrial Strategy, with £2 billion earmarked for a new AI Action Plan to build “home-grown AI” capacity.

Mike Randall, CEO at Simply Asset Finance, said the government’s infrastructure commitments showed “a clear sense of momentum building,” but cautioned that effective execution would be key.

“To expedite the delivery of these projects there must now be a detailed roadmap to success. This must include collaboration with local businesses, the cutting of red tape, and importantly, a plan of how funding and investment will reach businesses,” he said.

“The test will now be building and maintaining business confidence. Firms are hesitant to take the risks they need to grow because of their current lack of confidence in the future – so now the focus must be on creating the stability and support that unlock that growth.”

Financial firepower to back private investment

To further catalyse private sector growth, SR25 allocates £9.6 billion in financial transactions, including equity stakes and loans. These will expand the capital bases of Great British Energy and the British Business Bank (BBB), with the latter receiving a major uplift to a total capacity of £25.6 billion.

This move, enabled by reforms to fiscal rules, will allow the BBB to dramatically scale up its support for innovative UK firms. The Bank’s annual investments are expected to rise by two-thirds to around £2.5 billion.

“We welcome today’s announcement by the Government, which is a strong endorsement of the British Business Bank’s 10-year track record, market access and capabilities,” said Louis Taylor, CEO, British Business Bank.

“To deliver the Government’s growth mission it is critical that our most promising entrepreneurs can access the finance they need to grow their businesses, no matter what their background or where they are located.”

Stephen Haddrill, Director General of the Finance & Leasing Association (FLA), welcomed the announcement: “We’re very pleased to see that funding for the British Business Bank has been prioritised as we had recommended. This is great news for the thousands of SME businesses that have investment ambitions this year.”

Decarbonising transport

The Chancellor pledged £2.6 billion over the next three years to support the decarbonisation of transport. This funding includes £1.4 billion aimed at promoting the adoption of electric vehicles, including zero-emission vans and heavy goods vehicles (HGVs).

An additional £400 million will be dedicated to expanding the UK’s charging infrastructure, adding to the nearly 80,000 public charging points currently in place.

BVRLA Chief Executive, Toby Poston, said: “The Government is clearly committed to its road transport decarbonisation targets and giving serious thought to how it achieves them.

“The mandate flexibilities announced in April relieved the pressure on EV supply, today’s cash commitment could give a much-needed boost to demand.

“This £1.4bn could make a big difference in driving stronger and wider demand for vans, trucks and used electric vehicles. We will continue to work with colleagues at OZEV to highlight how this money can achieve the best return on investment.”

Broad-based economic support

While the Spending Review’s core focus is growth, it also delivers across key public services with NHS funding rising by 3% in real terms annually, reaching £29 billion per year; and defence spending will climb to 2.6% of GDP by 2027, with an £11 billion increase plus £600 million for security and intelligence services.