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Chancellor’s Spending Review: What It Means for UK Businesses

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In the latest Spending Review, Chancellor Rachel Reeves outlined a significant financial commitment to clean energy and infrastructure projects, reaffirmed the government’s net-zero ambitions, and made tough calls on departmental budgets. Here’s what UK businesses need to know—without the politics, just the facts.

Nuclear Power Takes Centre Stage in UK Energy Investment

One of the most prominent announcements in the Chancellor’s Spending Review was the £14.2 billion allocation to the Sizewell C nuclear plant in Suffolk, which is part of a broader £19 billion nuclear investment package. The remaining funds include:
 
– £2.5 billion for Rolls-Royce Small Modular Reactors (SMRs)
– £2.5 billion for a prototype fusion power plant
 
This underlines a clear commitment to nuclear energy as a cornerstone of the UK’s long-term energy strategy. As part of this shift, Great British Energy (GB Energy), the recently formed clean energy authority, will provide its SMR funding directly from its clean-energy budget. This represents a strategic pivot away from decentralised renewable technologies such as geothermal and solar, and towards large-scale, centralised nuclear infrastructure. Ministers also confirmed that the Sizewell C project is expected to create around 10,000 direct jobs and thousands more in related industries, promising a significant boost to local economies and the national energy workforce.

Energy Support for Industry Missing

Despite calls from business groups and energy-intensive industries, the Spending Review did not include additional measures to help companies cope with high energy costs. This has been a consistent concern across sectors such as manufacturing, chemicals, and metallurgy. According to the Office for National Statistics (ONS), from 2021 to 2024:
 

– Over one-third of UK businesses reported being affected by rising energy costs
– Small and medium enterprises (SMEs) were disproportionately impacted
– Many energy-intensive firms reduced output, froze investment or cut jobs to cope with these costs

Industry leaders were hoping for fresh relief or a roadmap in the Review. However, apart from pre-existing schemes like the Energy Intensive Industries (EII) exemption, there was no new policy support for industry energy bills.

front door of 10 downing street, representing the Chancellor's spending review and what it means for UK businesses

Net-Zero Commitments Remain Firm

While the Review lacked short-term support for energy costs, the Chancellor reaffirmed the government’s net-zero trajectory, describing clean-energy investment as essential for:
 

– National security
– Industrial regeneration
– Lower household bills by 2030

Nuclear power, home insulation, and long-term infrastructure projects remain central to this strategy. For businesses aligned with green innovation and sustainability goals, the direction of travel is clear—even if support remains limited in the short term.

Winners and Losers in Public Spending

The Spending Review outlined funding priorities across government departments, with significant implications for employment and procurement. Key highlights:
 
– Defence and NHS: Substantial funding boosts, potentially generating new business opportunities in supply chains and construction.
– Science and Technology: Targeted investment for innovation-led growth.
 
Meanwhile, other departments face cuts:
– Home Office: -1.7% annually

– Foreign Office: -6.9% annually (mostly aid-related)
– Department for Transport: -5% annually
– Department for Environment and Rural Affairs: -2.7% annually
– Department for Business and Trade: -1.8% annually

While some cuts reflect planned savings, others may lead to job and pay pressures in affected areas, possibly slowing public sector-led projects or spending in those domains.

Long-Term Vision, Short-Term Gaps

The Chancellor’s Spending Review clearly prioritises long-term energy security and net-zero ambitions, particularly through nuclear investment. However, the lack of direct industrial energy support leaves many businesses facing continued cost pressure without new relief mechanisms.
 
At BP Consulting, we help UK organisations to cope with ever-increasing energy costs. We will conduct free, no obligations assessments on your organisation’s energy and utility usage to identify areas of overspending and offer cost-effective solutions to reduce expenditure and increase efficiency. To learn more about how we can help your organisation, contact one of our dedicated specialists today by clicking here.
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