Spending review an ‘effort to jumpstart growth’ in economy, says leading Lancashire economist

Chancellor Rachel Reeves’s Spending Review represents an effort to lay the groundwork for long-term growth while also jumpstarting the economy in the short-term, according to a leading economist for a Lancashire accountancy and business advisory firm.

Professor Joe Nellis is economic adviser at MHA, the UK independent member firm of Baker Tilly International and 13th largest accountancy group in the UK, which has offices in Preston, Lancaster, Kendal, Liverpool and Manchester.

Joe said yesterday’s Spending Review, the process UK governments use to set department budgets for future years, was a ‘decisive shift’ and set an ‘ambitious tone for economic renewal’.

“The chancellor’s plan for front-loaded capital expenditure, financed through borrowing but kept within her fiscal investment rule, will be welcomed by many in the business community,” he said.

“However, the sustainability of this spending spree will ultimately hinge on reigniting economic growth. Without a robust rebound, the Chancellor may find herself forced to contemplate tax increases in the Autumn Budget to keep public finances on track.”

He added the announced programme of investments was designed to resonate with Labour’s traditional base and beyond.

“Key highlights include a three per cent annual real-terms increase in NHS funding over the life of this parliament, as well as significant investments in defence, social housing, transport, and energy transition,” Joe said.

He spoke about the £39 billion allocated to social and affordable housing, new transport initiatives outside London and the government’s push for nuclear energy.

“The chancellor also declared her ambition to position Britain as a ‘defence industrial superpower’,” said Joe, “with infrastructure projects supported by British industry and built using materials sourced from homegrown firms such as British Steel.”

“This Spending Review represents not only an effort to jumpstart growth in the short term but also to lay the groundwork for the longer-term, sustainable growth needed to lift living standards and tackle the challenges that lie ahead.”