The Chancellor of the Exchequer has firmly stated that her Spending Review and government budget plans will not see the UK return to austerity, as workers and businesses are squeezed by rising costs and turbulent global trade wars threaten to disrupt any sense of economic stability. 

The Chancellor’s overall rhetoric was pro-business, with many plans deeply entrenched in technology investment and energy sovereignty. 

For devolved nations, the UK administration says that these governments will receive their largest real terms settlements since devolution began. 

The Scottish government is therefore set to receive an average extra £2.9 billion across the duration of this current spending review. 

Overall, Reeves said that government spending will increase by 2.3% a year, with a £600bn budget. 

But what will this look like when it comes to tech? 

Emphasising Energy Security

Key to the Labour party’s goals is increasing the UK’s energy security amid global turbulence, as well as a push toward renewable sources. 

“I am determined to make sure that the energy technologies of the future are built here and owned here and that those jobs come to Britain,” Rachel Reeves said. 

To bolster this, Reeves announced £30bn would be put toward the “biggest rollout of nuclear power for half a century”, with the addition of £2.5bn toward nuclear fusion research. This includes the investment in the Sizewell C reactor announced yesterday, as well as the small modular nuclear reactor partnership with Rolls-Royce already announced. 

Reeves also confirmed that a carbon capture project – Acorn – in Aberdeenshire would benefit from government funding. 

“While increasing pressures on defence and public services could have signalled a risk of short-term trade-offs, we’re glad to see the government back investment in the transition to clean energy,” David Watson, principal consultant at energy consultancy BFY Group said. 

“Striking the right balance between short-term budget constraints and long-term benefits, like future-proof jobs, lower energy bills and reduced emissions, has never been more crucial.

“The real challenge now is delivery – turning ambition into impact through clear timelines, private investment, and local action. The government’s announcement today will focus minds on the question of how quickly the UK can now accelerate towards delivering a net zero.”

Record Funding for R£D

Reeves has also confirmed record levels of funding for research and development in the UK, which it set to climb above £22bn by the end of the Spending Review. 

“The £22.5 billion investment into innovation and research will elevate the UK’s global status in clinical trials and R&D,” David Harris, CEO and founder fo Cambridge Healthcare Innovations said. 

“There are many treatment areas that haven’t seen equal levels of innovation to date. We now have a unique opportunity to change this, and bringing together the charity, public and private sectors in this initiative can be a turning point for greater levels of domestic innovation.”

Further, while this investment is “promising,” Natalie Knight-Wickens, partner at Spencer West LLP, warns that researchers and business heed regulations before jumping into data-heavy research and AI. 

“As a lawyer I see real promise here: funding for faster drug treatments and longer‑lasting batteries across regions is bold,” Knight-Wickens said. 

“But success hinges on accessible intellectual property protections, adaptive regulatory pathways, and clear public-private co-investment terms. Regional authorities with £500 million each are empowered, but only those legal-ready SMEs can compete.

“Startups need to know how to protect what they’re building, from ownership of code and data to navigating funding agreements with regional authorities. The opportunity is real, but it’ll favour those who are legally ready.

“Remember, innovation doesn’t just need funding, it needs foundations.”

AI Boost 

Further, £2bn was announced to support the government’s AI Action Plan, with aims to upskill and train young people in the UK to better prepare them for the future. 

Government spending will reach £1.2bn a year on supporting training, upskilling, and apprenticeships for young people in the UK. 

“The £2 billion investment in the AI Action Plan has great potential to drive growth in the UK economy, transform the public sector and propel the country to a leading position in the global AI race,” Greg Hanson, group vice president and head of EMEA North at Informatica, said. 

“But the real challenge lies ahead. Getting ahead in AI isn’t solely about acquiring and deploying technology. It’s about cultivating a workforce with deep AI knowledge and skills. 

“If the UK doesn’t have the right skillset, valuable insights will be left undiscovered and productivity gains remain elusive.  

“Many organisations are in the early stages of building AI readiness and preparing their data for AI. Moving too quickly, without establishing the right foundations, skills, and culture, could result in long-term setbacks rather than sustainable success.” 

Daniel Pell, VP and country manager for UKI, Workday, said: “Harnessing the benefits of Artificial Intelligence can help government departments operate within their financial settlements and deliver the improved business performance needed to fund investments in public services in the future.

“The successful implementation and adoption of AI hinges on workers and citizens feeling confident in using the technology. We particularly welcome the new investment in training and apprenticeships, and in the development of AI skills through measures such as the “TechFirst” initiative that the Prime Minister launched earlier this week, which will bring digital skills and AI learning into classrooms and communities.”

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NHS Tech Boost

The NHS will see a 3% boost in its yearly funding, Reeves said, in a determined move against austerity measures toward what she described as “our most treasured public service.”

More specifically, the NHS technology budget will also rise by 50%, reaching £10bn in investment, aiming to update and digitise the NHS’s analogue system. 

Tom Whicher, CEO and co-founder of DrDoctor, says the £29bn funding boost for the NHS is “a welcome step” in improving the NHS. 

“But,” he added, “for the government to effectively change the public’s relationship with the NHS, it’s critical that some of this investment is allocated to improving interoperability within the system – a lot of tools are already in place, now it’s about ensuring that all platforms managing patient data speak to core functions – like the NHS App – for scaled, consistent access to care across the country, improving both patient outcomes and clinician efficiency”.

Similarly, Ram Rajaraman, healthcare and life sciences industry lead at Quantexa pushed for the government to work on a ‘single patient record’ to improve NHS wait times. 

“A single patient record will also enable wider innovation that will help improve outcomes and reduce waiting lists,” Rajaraman said. 

“Once patient data is unified, and includes wider determinants of health such as environment and family socioeconomic history, the NHS can implement a full 360-degree view on which to build AI solutions to track population health, identify service gaps and allocate resources more effectively”.

Boom for Business 

To support overall business and bolster startups in the UK, Reeves announced Labour would be “increasing the financial firepower of the British Business Bank,” which is already one of the largest investors in the UK. 

The Bank’s funding capital is set to increase by two-thirds, amassing to £25.6bn in an effort to embolden the bank to fund more startups and scaleups throughout Britain. 

“The UK has a great incubator for AI with its world class universities and research institutions.  However, businesses often find it difficult to access the capital required to scale successfully,” James Clark, data protection, AI, and digital regulation partner at law firm Spencer West LLP said. 

The increased funding into the British Business Bank “could be helpful here,” Clark said.

Reflecting on the spending review, ScotlandIS CEO, Karen Meechan, said: “It was reassuring to see a clear recognition of science, technology and innovation in the spending review. The £750 million investment in the University of Edinburgh’s supercomputer is a welcome step forward. We are proud to have been part of efforts to get this project back on the Government’s agenda after their disappointing decision last Autumn to pull its funding.

“The increased budget for security and intelligence is positive. It complements the work already underway here through our cyber cluster and CyberScotland partnership to improve security across Scotland. It’s equally encouraging to see the NHS technology budget increase by almost 50% by 2028-2029. While the budget is UK-wide, it presents real opportunities for Scottish tech firms to deliver solutions that support the digital transformation of the NHS.

“The additional funding for the Government’s AI Action plan is certainly a plus for Scotland and whilst the devil will be in the detail, we do look forward to seeing how this translates into tangible opportunities for our members. Looking ahead to the upcoming budget, we must continue to focus on the broader drivers that enable growth – including easing tax burdens on businesses and focusing on long-term investment in digital skills to ensure we have the homegrown talent our industry needs to thrive.”