Chancellor must 'confront range of challenges' in Spending Review

12 Dec 2024

Think tank the Resolution Foundation has stated that Chancellor Rachel Reeves will need to 'confront the good, the bad and the ugly' in the upcoming Spending Review.

The Foundation said the 'good' challenge will be allocating £100 billion of capital spending announced at the Autumn Budget on 30 October. It said that where this money is spent will help to determine whether the UK is able to boost economic growth over the medium-term.

According to the Resolution Foundation, the government also needs to outline how it intends to cut day-to-day spending by £8.4 billion after 2025/26. It warned that these spending decisions may have to be made against a 'backdrop of a weaker economic outlook'. The Foundation stated that the Office for Budget Responsibility (OBR) may downgrade its outlook for productivity. It warned that just a 0.2% cut in the OBR's forecast for trend productivity growth would increase borrowing by around £20 billion.

James Smith, Research Director at the Resolution Foundation, said: 'The Chancellor will need to use the Spending Review to confront the good, the bad and the ugly of UK economic policy. The £100 billion of extra investment announced at the Autumn Budget was hugely welcome, but it will need to spent well to boost growth.

'Even more challenging will be finding further savings from already stretched departments while ensuring that the quality of public services improves over the parliament.'