This was always going to be a difficult Spending Review as overall government spending was set to increase by only 1.2% in real terms, especially given the competing pressures of health and defence spending. Health spending is up 3% perhaps more than expected, but within the constraints of a fixed budget there must be winners and losers, and it seems the Home Office and policing are the losers with any shortfall made up from higher council tax rises.

A speech that was dominated by numbers obfuscates the fundamental problem the UK faces; the country is spending more than the tax revenue it generates. The Chancellor is relying on growth in the future to solve this intractable deficit.

Yet recent data suggests growth is proving elusive and potentially higher taxes funding increased public spending is unlikely to be the answer.

The gilt market has responded positively because there were no obvious breaches of previous spending commitments, despite the announcement of an additional £113bn of investment spend but with no clarity on the source of funds. The Government spending review has kicked the ‘can’ down the road; how long the ‘can’ can be kicked remains the fundamental question facing the UK economy.

In this report we present an analysis of the sectors most affected by the spending review – notably Building Materials & Construction, Defence and Healthcare – alongside an assessment of those companies likely to be impacted.