Labour government promises £113 billion investment to revitalise UK economy and create jobs

Rachel Reeves, the Chancellor, has unveiled plans for a landmark £113 billion capital investment as a centrepiece of the upcoming spending review. This substantial financial commitment aims to fund projects in housing, transport, and energy, which Reeves has argued could only have been delivered under Labour’s governance.

The investment, sourced through recent adjustments to fiscal rules, is expected to span across the next parliamentary term. The Chancellor emphasised that these funds would not only stimulate economic growth but also generate thousands of jobs and apprenticeships, reinforcing domestic supply chains. Reeves stressed her desire to ensure every penny of these resources directly benefits the UK economy.

With a backdrop of public discontent and rising calls for economic reform, Labour intends to solidify its narrative by leaning heavily into delivering visible and impactful changes. Reeves stated that £113 billion represents a deliberate political choice made by Labour, contrasting it as unattainable under the previous government’s policies. She made it clear that these investments would serve as a legacy of Labour’s ambitious economic vision.

Specific sectors are set to experience boosts, including housebuilding, which ties into Labour’s long-term target of constructing 1.5 million new homes. Large-scale projects such as the development of the East West Rail and the Sizewell C nuclear power station will also likely receive allocations under this initiative. Other priorities include rebuilding schools, major strides in hospital infrastructure, and safeguarding government research and development budgets.

Health and defence are predicted to emerge as major winners in the review, with increased allocations to key capital initiatives. Though departments have been asked to model substantial budget reductions of up to 7% for day-to-day spending over the next four years, Labour argues that bolstering capital spending aligns with its broader vision of creating long-term community value.

Rachel Reeves has also signalled her intention to counter concerns about government borrowing, which reached £20.2 billion in April. By investing strategically in infrastructure and social priorities, Labour hopes to stimulate private sector investment and disrupt what some party insiders have described as a “doom loop” in economic stagnation.

The announcement comes amidst internal party pressures to address issues such as cuts to disability benefits and winter fuel support. Reeves has maintained that Labour’s fiscal strategy represents a meaningful departure from previous governments by providing genuine financial backing for transformative projects rather than empty promises or symbolic gestures.