Political Fix Reeves sets Labour’s course – but what will it deliver?
Jun 13, 2025
Chris Giles, an economics commentator for the Financial Times, joins the discussion to dissect Labour's recent spending review and its implications. He highlights the optimistic tone of Rachel Reeves against the backdrop of grim economic data. The conversation explores funding priorities, particularly in the NHS and defense, and the perplexing details of housing budgets. They also delve into the challenges Labour faces regarding voter perception and potential tax increases, all while navigating the complexities of public finance and economic strategy.
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NHS Funding Prioritized but Insufficient
- The NHS receives 90% of the extra real terms funding from the day-to-day spending allocation.
- However, this still falls short of the historic 3.7% annual real-term growth the NHS has seen since 1940s.
Productivity Key to Spending Impact
- Public sector productivity, especially in health, must improve for spending increases to feel meaningful.
- Without productivity gains, even a 3.3% rise in health budgets will feel inadequate.
Austerity's Perception Depends on Reform
- The definition of austerity depends on whether people feel services have stopped or degraded.
- Labour's front-loaded spending aims to reform services early but risks austerity perception if reforms fail.