Budget 2025 / Spring Statement 2025 / Spending Review 2025
Overview
Three fiscal documents establish the government’s spending framework. The Budget was delivered in autumn 2024. The Spring Statement (26 March 2025) updated the economic outlook and confirmed defence and welfare reforms. The Spending Review (11 June 2025, last modified 30 June 2025) sets departmental budgets through 2028-29 (resource) and 2029-30 (capital).
Strategic intent
Core claim: Fiscal responsibility and investment are complementary — both stability rules will be met while delivering a significant uplift in capital investment. The government frames infrastructure, defence, and NHS spending as growth-enabling, not just cost.
Three primary objectives (Budget 2025): Reduce cost of living (~£150 on energy bills); improve NHS (5.2m additional appointments, 250 Neighbourhood Health Centres); restore fiscal responsibility (reduce debt and borrowing).
Fiscal framework
Rules (both met per OBR)
- Stability rule: Current budget surplus by 2029-30; met with £21.7bn buffer (Budget) / £9.9bn (Spring Statement — buffer narrowed)
- Investment rule: Net financial debt falling as share of GDP in 2029-30; met by £24.4bn margin
Key metrics
| Metric | 2024-25 | 2029-30 |
|---|---|---|
| GDP Growth | 0.9% | 1.8% |
| PSNB (% GDP) | 4.8% | 2.1% |
| CPI | 2.5% | 2.0% |
| Unemployment | 4.3% | 4.1% |
| Employment | 33.6m | 34.8m |
Spring Statement downgraded 2025 growth from 1.5% (Budget) to 1.0% — significant reduction within months of the Budget, narrowing fiscal headroom.
Key commitments
Defence
- mod-defence-spending-2-6pct-gdp-2027 — Defence to 2.6% of GDP by 2027 (Spring Statement committed 2.5%; Spending Review upgraded to 2.6%); funded via reduction in ODA from 0.5% to 0.3% of GNI; cost £11.8bn (2025-26 to 2027-28); £2.2bn uplift to MoD in 2025-26
- Ambition for 3% defence spending in next Parliament; 5% national security with NATO allies by 2035
NHS and Health
- dhsc-nhs-29bn-increase — £29bn real terms increase (£53bn cash) from 2023-24 to 2028-29; 3.0% average annual real terms growth
- dhsc-nhs-18-week-92pct — 92% of patients to start consultant-led treatment within 18 weeks by Parliament end
- £300m NHS capital boost (Budget); NHS capital budget: £2.3bn real terms increase by 2029-30
Infrastructure and Growth
- hmt-725bn-infra-decade — Backed by £120bn additional departmental capital investment (SR) over SR period
- hmt-affordable-homes-39bn — £39bn over 10-year Affordable Homes Programme
- hmt-sizewell-c-14-2bn — £14.2bn for Sizewell C nuclear
- hmt-rd-22-6bn-2029 — R&D: £22.6bn annually by 2029-30
- Transport for City Regions: £15.6bn
- Lower Thames Crossing: £900m
Welfare
- Two-Child Limit removal: lifts 450,000 children from poverty
- dwp-pathways-work — Welfare reform: £4.8bn savings by 2029-30; £1bn/year employment/health support from 2026-27
- Universal Credit standard allowance: rising from £92 to £106 weekly (single, 25+) by 2029-30
Efficiency
- All departments: minimum 5% savings by 2028-29
- Administration budgets: 16% real terms reduction by 2029-30
- Expected £14bn annual efficiency gains by 2028-29
- £3.25bn Transformation Fund (digital, AI, children’s social care, SEND)
Devolved settlements (additional annual funding 2026-27 to 2028-29)
| Nation | Resource | Capital |
|---|---|---|
| Scotland | £2.4bn | £510m |
| Wales | £1.4bn | £200m |
| Northern Ireland | £1bn | £220m |
Assumptions and risks
- Growth downgrade from 1.5% to 1.0% in 2025 within three months of the Budget signals OBR forecast instability; fiscal buffer narrowed from £21.7bn to £15.1bn (stability rule)
- CPI peak forecast at 3.8% (July 2025) — higher inflation affects real terms spending power of NHS and other settlements
- Efficiency targets (5% departmental, 16% admin reduction) are ambitious and historically difficult to deliver in practice
- Defence uplift to 2.5% funded by ODA cut — creates dependency between security spending and development commitments
Tensions flagged
- defence-oda-funding — ODA cut from 0.5% to 0.3% GNI to fund defence uplift; explicitly named trade-off in Spring Statement; undermines aid commitments
- delivery-confidence-fiscal-ambition — £725bn infrastructure ambition set against NISTA showing 31 red-rated projects worth £198bn in whole-life costs
Source files
raw/spending-fiscal/budget-2025.mdraw/spending-fiscal/spring-statement-2025.mdraw/spending-fiscal/spending-review-2025.md