Nearly 1,700 Afghan refugee families return in one day
Afghanistan recorded the return of 6,202 refugees from Iran and Pakistan on Friday, officials confirmed....
British Finance Minister Rachel Reeves is preparing to unveil a high-stakes, multi-year public spending review on June 11 that will allocate over £2 trillion ($2.7 trillion) and shape the Labour government’s ambitions through the rest of its term.
The review—the first of its kind under Labour since its landslide win in July 2024—will determine funding priorities across core areas such as healthcare, defence, housing, and infrastructure. However, growing fiscal constraints and political pressure are narrowing Reeves' room for manoeuvre.
“There are good things I have had to say no to,” Reeves admitted this week, previewing £16 billion in regional transport funding as part of next week’s package. With the NHS accounting for nearly 40% of departmental spending and new commitments on defence, other sectors face possible stagnation or cuts.
The spending plan arrives at a politically sensitive moment. After a strong start, Labour's popularity has slipped, with Nigel Farage's Reform Party outperforming in local elections. The government partially reversed cuts to heating subsidies for pensioners—initially removed post-election—in a bid to regain public support.
The budget will confirm slower spending growth in coming years. According to the Institute for Fiscal Studies (IFS), day-to-day spending will rise just 1.2% annually above inflation from 2026–27 to 2028–29, while capital investment will grow 1.3% a year through 2029–30—both far below this year’s 11.6% capital increase and 2.5% in current spending.
Capital-intensive defence plans to raise military spending to 2.5% of GDP, promised by Prime Minister Keir Starmer in February, will likely absorb much of the investment growth. The IFS warns this could mean no real-terms rise for other departments and cuts if health spending rises at historic Labour levels.
Reeves has pledged not to alter tax policy more than once a year and to stay within strict fiscal rules, leaving little space for additional borrowing. Yet analysts like Deutsche Bank’s Sanjay Raja expect she may need to announce £10–15 billion in tax hikes at her next budget. “Tax rises are inevitable,” Raja said.
Within Labour, some lawmakers are growing uneasy. Florence Eshalomi, chair of Parliament’s housing and local government committee, urged Reeves to match spending with the party’s pledge to build 1.5 million homes by 2029. Others, like MP Chris Curtis, warn the government must prioritise long-term growth over short-term relief.
The Conservatives have criticised the government’s borrowing trajectory, with finance spokesperson Mel Stride claiming Reeves' policies would add £80 billion to debt interest by the next election.
With spending allocations potentially forcing sharp efficiency drives or pay restraints across the public sector, next week’s announcement could test Labour’s promise to deliver growth without deepening fiscal risk.
The stakes are high: the choices Reeves makes now will not only define Labour’s legacy but also determine whether the government can deliver on its ambitious pledges—or face tougher trade-offs in the years ahead.
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