Spending review: Over £4.5 billion of “hidden” cuts to departments could be avoided with better UK-EU trade deal

EMBARGO: Immediate Release

Government departments are facing real-terms cuts of £4.6 billion by 2028-29, Liberal Democrat analysis of the Spending Review has revealed.

The Liberal Democrats said these “painful cuts” could be avoided by boosting growth, including through a better UK-EU trade deal that could boost public finances by around £25 billion a year.

Some departments will see significant cuts over the spending review period. The Foreign Office, Home Office and Department for Transport are all expected to be hit with real-terms cuts of over £1 billion. DEFRA will also see a £355 million real-terms cut over three years.

The Liberal Democrats said that the spending review will see public services already stretched to breaking point be expected to endure another round of painful cuts.

The party said that the Government would not have to make these choices if it got a better trade deal with the EU and moved to negotiating a bespoke UK-EU Customs Union. Previous analysis has found that a better deal even within the Government’s own red lines could boost GDP by 2.2% raising £25 billion a year in extra revenue for the Exchequer.

Liberal Democrat Treasury spokesperson, Daisy Cooper MP said:

“Hidden in the small print of the spending review are painful cuts to public spending, with funding for social care and our police being stretched to breaking point.

“We cannot afford to wait another decade for the government to fix social care while patients are treated in hospital corridors and elderly people wait for months on end for a care home place.

“The Chancellor would not have to make these difficult choices if she got serious about going for growth, got a better trade deal with the EU and cut red tape for British businesses.   

That is the best way to boost our economy, put more money into people’s pockets and rebuild our public services.”

ENDS

Notes to Editors:

The Liberal Democrat analysis can be found here: https://docs.google.com/spreadsheets/d/1RcqY7CauCI4e7O9yIpU3xzXRdtnUA0RnyLdI8uyVclk/edit?gid=1150283404#gid=1150283404 

Please note, only departments facing average annual real-terms cuts according to the Government have been included in the analysis.

Reporting on the £25 billion a year in extra revenue that could be raised in a better deal with the EU can be found here: https://www.theguardian.com/politics/2025/may/17/lib-dems-claim-deeper-trade-deal-with-eu-would-raise-25bn-of-tax-revenue