Chancellor Delivers Budget 2025

Chancellor of the Exchequer Rachel Reeves has delivered Budget 2025 to the House of Commons. Preceded by an unprecedented leak of the Office for Budget Responsibility’s (OBR) Economic and Fiscal Outlook, the Chancellor announced that she will tell the OBR to assess the fiscal rules just once a year going forward. The OBR forecasts the economy will grow by 1.5% this year, higher than its previous forecast of 1%. However, it expects growth of 1.4% in 2026 and 1.5% in the following four years – all of which are downgrades from its forecast made in March.

Public R&D spending is set to rise steadily over the decade, reaching £22.6 billion a year by 2029-30, with the Budget laying out a series of targeted programmes intended to reinforce the UK’s scientific base and accelerate mission-led innovation. Central to this is UKRI’s £500 million R&D Missions Accelerator Programme, which will channel funding into nationally important challenges, alongside a £410 million Local Innovation Partnerships Fund aimed at strengthening regional research and innovation ecosystems. The government is also committing more than £1 billion to expand the Advanced Research and Invention Agency (ARIA), signalling a willingness to support high-risk, high-reward research, and up to £750 million for a new national supercomputer in Edinburgh to deepen the UK’s AI and computational science capabilities.

The government also intends to improve how innovation reaches the wider economy. Every department will appoint a Procurement Innovation Champion, and a new Innovation Marketplace will be established to give smaller, research-intensive companies a clearer route into government supply chains. Innovate UK will introduce a new £130 million Growth Catalyst to support frontier companies that have already secured significant investment and are positioned to scale.

Higher education features in the Budget as a crucial part of the research pipeline. UKRI’s investment in core quality-related research funding and the Higher Education Innovation Fund are protected in real terms, delivering a cumulative uplift of more than £425 million over the spending period. New investment in talent development includes entrepreneurship-focused doctoral training schemes worth up to £25 million, expanded Enterprise Fellowships (including those in Scotland, Wales and Northern Ireland) to help researchers transition into business, and further support for programmes encouraging under-represented groups in innovation. The government also plans to overhaul research funding processes by significantly expanding investment in metascience, accelerating distributed peer review across UKRI, and cutting decision-making times for researchers.

The government will support researchers by applying powerful scientific methods to science policy itself. The government will more than treble its investment in metascience in 2026-27, including in the UK’s world-leading Metascience Unit, and it will expand distributed peer review across each of UKRI’s research councils. This has shown potential to halve the time researchers wait for funding decisions.

International student policy will be reshaped through a new levy of £925 per student per year from 2028-29, applied once institutions enrol more than 220 international students. Revenues will be reinvested into higher education and skills, with a focus on maintenance grants for disadvantaged students on priority courses. Together, these measures signal a strategy that seeks not only to increase the scale of UK research but to improve its speed, connectivity and economic impact – linking universities, industry and government more tightly in pursuit of long-term national growth.

If you enjoyed this analysis, you’ll find plenty more insightful blogs and expert commentary in ResearchConnect.