Decoding UK Fiscal Events: Budget, Spring Statement, and Spending Review Explained

A Budget, a Spring Statement, a Spending Review - do these events ever stop?

Well. firstly, no they don't! If you've been feeling a bit lost listening to news stories about the Spending Review or about the UK government’s “fiscal events” - you’re not alone! Whether it's the Budget, the Spring Statement, or the Spending Review, there has been a lot to keep up with.

But these events are far from just jargon—they shape everything from our taxes to public services. The three different events all do interlock and have a clear relationship though, in this post, I've done a bit of an explainer to break down these events, and also set out some of key changes expected in the 2025 Spending Review.

So, What’s the Budget?

The Budget is the big one—the annual financial “showstopper.” It's usually held in the spring, and it’s the moment when the government lays out how it plans to raise and spend money for the year ahead. This is when the Chancellor of the Exchequer makes decisions about tax rates, public services, and how much money the government will borrow. In many respects, this is when the government financial and economic decision-making gets real for us as citizens. We fin out if our taxes are going up, if our favourite public services are getting more funding, or if the government is going tighten belts and cut spending.

What’s the Spring Statement?

Now, the Spring Statement is more like a “financial check-up.” It doesn’t dive into all the details like the Budget, but it updates the public on the government’s latest economic forecast. Think of it as a quick pulse check on the economy. The Chancellor updates us on things like expected growth, inflation, and borrowing—basically, how things are looking in the short-term. They don't usually announce extra spending (or changes to spending) although Rachael Reeves did this year.

What’s the Spending Review?

The Spending Review is where the government sets out its spending plans for the next few years (usually about three). If the Budget is all about the short-term, the Spending Review looks longer term. The Spending Review is the ultimate forecast and is built using lots of financial assumptions, so it's not foolproof. The SR is the point at which government decides how much money each department (think health, defence, education) will get in the medium term. This is intended to provide some certainty, allowing strategic planning, and enable ministers to shape the future of public services and infrastructure. It's important for businesses of every kind (from commercial firms to charities) to understand so they can make their own decisions, and it’s a key moment for us as taxpayers to understand where our tax money will go over the coming years.

Let’s Dive Deeper: The 2025 Spending Review

This year’s 2025 Spending Review is particularly crucial, with some big-ticket items already on the table. You will have heard the mood music about the poor state of the economy following last year's General Election, with the government sadly, the economic picture hasn't perked up much

1. Big Funding Increases for Defense and Health

• Defense: The UK government has committed to increasing defense spending to ensure national security and modernise the military. So, expect more resources for the armed forces—important for both the country’s safety and global influence.

• Health: The NHS will also see a bump in funding to meet the rising demand for services. With more people needing healthcare, especially post-pandemic, this extra cash is meant to support the NHS in keeping up with the demand for treatments and services.

  
  

2. Winter Fuel Allowance U-turn

Here’s a twist—earlier, the government was planning to cut the Winter Fuel Allowance, a financial support for older people during the colder months. But, after public outcry, they’ve made a U-turn, and now that’s going to cost the government £1.25 billion. While this is good news for the elderly, it adds pressure to the government’s budget, and it must be paid for somehow. We'll find later today how the government plan to find the money.

3. More Cash for Infrastructure Projects

Infrastructure—the roads, railways, airports, and tech systems that keep the country running—is also getting a boost. The government plans to increase capital spending on long-term projects by £113 billion. This could mean new roads, trains, energy systems, or even better broadband across the UK. While this is a positive step for growth and jobs, it also adds to the government’s borrowing.

Key Areas to Watch in the 2025 Spending Review

While the 2025 Spending Review outlines some exciting spending commitments, there are a few things you’ll want to keep an eye on:

• Will the Government Stick to Its Spending Plans? These are shaping up to be ambitious plans, but there’s a risk the government might not be able to stick to them. If the economy takes a hit or if forecasts turn out to be too optimistic, we might see cuts or delays to planned projects. So, expect some adjustments down the line - this is where the annual budget starts to tell a story.

• Will Fiscal Rules Bend?The UK has strict fiscal rules about how much money it can borrow and spend. But with these big increases in spending, the government might find it tough to stick to the rules. Fiscal flexibility could become a talking point if they need to borrow more money to fund all these commitments.

• More Public Service Cuts? The news is full of speculation about the winners and losers in the Spending Review. Today's news is that the Home Office may need to make cuts in other areas to protect policing. Consider what that may mean - the Home Office is also responsible for big areas like the Border Force and immigration. So, it's unlikely any cuts here will be politically pain-free. The Foreign, Commonwealth, and Development Office, and the Department for Digital, Culture, Media, and Sport are also likely to take a hit so overseas aid and libraries, museums, theatre, sport, and art could also be on the chopping block.

• Tax Hikes or Benefit Cuts?To make all these plans work, the government will almost certainly need to raise taxes or cut other benefits. Disability benefits are already on the chopping block, so there's a chance the Chancellor could go deeper, or there may be tax hikes to balance the books. These are tough choices, and the government will have to weigh them carefully.

  
  

What's next?

The 2025 Spending Review is a major financial moment for the UK. With commitments to defense, health, and infrastructure, the government is betting on growth and better public services. But with higher spending comes higher risk—not only of the government failing to deliver on its plans, but cuts to key public services, benefit cuts for disabled people, or equally unpopular tax hikes.

When?

The Spending Review will take place in the afternoon, 11th June, after Prime Minister's Questions which takes place at 12 midday with the business being led by the Chancellor of the Exchequer, Rt Hon. Rachael Reeves MP, and accompanied on the front bench by all HM Treasury Ministers.

Responding to the Spending Review?

Your organisation is likely to be impacted by the Spending Review in some way, shape, or form. How you respond and when is absolutely key.

If you need advice on strategy, or some physical help in how to make sure your voice is heard in the political tumult that follows, get in touch! We're experts in political engagement and can certainly help you develop your response.