MNI POLITICAL RISK ANALYSIS-UK Spending Review: Analyst Views
Jun-12 15:30By: Tom Lake and 1 more...
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Credibility Concerns On Health, Defence & Administration
On our first 24-hour read of the Spending Review details, we are most concerned about the credibility of health productivity and spending (despite the headline increases), the future increases in defence spending and the ability to deliver admin cuts on the scale suggested. Together with higher bond yields and inflation remaining relatively sticky as well as global growth forecast downgrades, and the April monthly borrowing figures coming in GBP3.5bln above the OBR's forecasts, it looks as though there will be a sizeable requirement for Chancellor Reeves to increase taxes in the Autumn Budget if she is to meet her fiscal rules.
- Despite health and social care spending making up the largest part of the budget and being discussed as one of the big winners, all of the increase in the budget in real terms is in current spending. Health and social care real spending will average 2.8% in real terms between FY25-26 and FY29-28 (NHS England 3.0%).
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