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Chancellor to speak to Sky News after pledging 'national renewal' in spending review

Rachel Reeves will speak to Sky News this morning after outlining her long-awaited spending review, which saw a major cash boost for the NHS. Watch and follow live coverage throughout the day in the Politics Hub.

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UK economy shrinks by more than expected

The UK economy shrank by 0.3% in April, the latest data from the Office for National Statistics shows. 

Services shrank by 0.4%, along with production at 0.6%, but construction moved in the opposite direction, growing by 0.9%. 

Economists expected a 0.1% contraction in April, following growth of 0.2% in March.

The slowdown has been blamed on the financial uncertainty caused by steep tariffs imposed by Donald Trump.

What is GDP and why do we care about it? 

GDP is a tool used to assess the size and health of an economy.

It stands for gross domestic product and measures the monetary value of final goods and services produced in the country over a given period.

Generally, if GDP is growing and inflation is in check, it's a strong sign that the economy is doing well, with more jobs and better wages available, and people spending more money.

If it's falling, it signals the economy is doing badly, often bringing with it lower incomes and job cuts.

Governments, businesses and economists monitor GDP growth among other indicators to understand where the economy stands - and where it's headed.

Reeves set to speak to Sky News, as she confirms 拢6bn NHS funding following spending review

 The chancellor is set to speak to Sky News, following the spending review.

Rachel Reeves is on a visit to a hospital in Derby, where she has confirmed some 拢6bn will be spent on speeding up testing and treatment in the NHS.

It follows Rachel Reeves unveiling her spending review, which made health the number one priority - with 拢29bn of extra cash per year promised for the NHS.

This investment, confirmed today, will help pay for new scanners, ambulances and urgent treatment centres aimed at providing an extra four million appointments in England over the next five years.

The chancellor hopes the funding will reduce waiting lists and reach Labour鈥檚 "milestone" of ensuring the health service carries out 92% of routine operations within 18 weeks.

Reeves said: "Part of our record investment will deliver 4m tests, scans and procedures, so hardworking people can get the health care they and their families need. 

"There is no strong economy without a strong NHS, and we'll deliver on our Plan for Change to end the hospital backlog, improve living standards and get more money in people鈥檚 pockets."

The new 拢6 billion investment will come from the capital settlement for the NHS and will also help to speed up diagnoses with scans and treatment available in places such as shopping centres and high streets.

A further 拢30 billion will also be invested over the next five years in day-to-day maintenance and repair of the NHS estate. Of this, more than 拢5bn will be spent specifically on repairing the most serious and critical infrastructure.

It follows the spending review yesterday, which set out day-to-day spending across government for the next three years, as well as plans for capital investment over the next four years.

The NHS and defence were seen as big winners from the review, as both will see higher than average increases in public spending. 

But this means other departments, such as the Home Office and the Foreign Office, saw their budgets squeezed.

Good morning and welcome to the Politics Hub this Thursday, 12 June.

In Westminster, the story very much remains the chancellor's spending review this morning. We heard an awful lot about it yesterday and received quite a bit of reaction - but there's plenty more of that still to come. 

Rachel Reeves is on a visit to a hospital this morning, where she will be talking up her big injection of 拢29bn in the NHS, and what it means for patients. 

The chancellor will be joined by Health Secretary Wes Streeting on the visit, where they will announce that the extra money will lead to up to 4m additional NHS tests and procedures over the next five years, as well as new scanners, more ambulances and urgent treatment centres to support emergency care teams.

If that all sounds a little too rosy for Reeves, then don't worry - because the ONS is set to release its GDP estimate for April, and economists are predicting it will show a 0.1% contraction following growth of 0.2% in March. Expect the chancellor to blame global economic turbulence. 

Elsewhere, both the IFS and think tank the Resolution Foundation will reveal their full and considered responses to the spending review this morning. 

But it's not just the chancellor in action. Streeting will be speaking during the hospital visit at around 9am, before popping up again at the NHS ConfedExpo 2025 in Manchester around lunchtime.

Also keeping busy today is the foreign secretary, who is attending the Lord Mayor鈥檚 Summer Banquet this evening, where he will make a speech. 

Meanwhile, the defence secretary is formally opening BAE Systems' new 拢25m artillery production facility in Sheffield and the prisons minister Lord Timpson is addressing members at a conference on the justice system in London. 

And in opposition corner, Kemi Badenoch is speaking to the Peel Hunt FTSE250+ conference mid-morning, and will no doubt be sharing her criticisms of the spending review. 

Coming up on Sky News this morning:

  • Daisy Cooper, the Liberal Democrat deputy leader and Treasury spokesperson;
  • Rachel Reeves, the chancellor.

We'll bring you all the updates in the world of politics as they happen, right here on the Politics Hub.

Good night

That's it for another busy day in Westminster.

Join us again tomorrow.

Potential constitutional crisis avoided as Lords back down on AI

Another story that may have passed you by, is the House of Lords potentially blocking the government's Data Bill.

This had led to warnings of a constitutional crisis, with the unelected upper house blocking legislation passed by the democratically elected house.

Peers had wanted greater protections for creatives from AI and big tech companies.

Negotiations on a way forward had not proved successful, despite the government promising that legislation on AI will be introduced at a later point.

One peer who had opposed the government, but has now withdrawn their amendments, said: "I want to show the other place that we can act with dignity in this chamber and make our point peers have done on so many occasions and by such huge majorities.

"But, on that note, I have decided on this occasion that enough probably is enough. I think we鈥檝e made our point."

'Understandable' US is looking to review AUKUS

Another development that may have slipped past you while the spending review was underway came from the United States.

Reuters, among other, have been told that the Trump administration is carrying a review of the landmark AUKUS agreement.

This is a deal between Australia, the UK and the US announced under Boris Johnson and Joe Biden.

It is supposed to help Australia acquire nuclear-powered submarines, as well as other defence partnerships.

While some have reported concerns in Canberra and London due to the decision, on the record the UK government seems a bit more sanguine.

They have pointed out the Labour government did a review when they came to power.

A Foreign Office spokesperson said: "AUKUS is a landmark security and defence partnership with two of our closest allies.

"It is one of the most strategically important partnerships in decades, supporting peace and security in the Indo-Pacific and Euro-Atlantic, while also delivering jobs and economic growth in communities across all three nations.

"It is understandable that a new administration would want to review its approach to such a major partnership, just as the UK did last year. 

"The UK will continue to work closely with the US and Australia at all levels to maximise the benefits and opportunities which AUKUS presents for our three nations."

A US official told Reuters that the idea is to ensure the "initiative of the previous administration is aligned with the president's America first agenda".

Controversial disability benefit reforms will go ahead next year

The government has told MPs it will not back down from its controversial reforms to disability benefits, which are set to be introduced to parliament later this month.

More than 100 Labour MPs are thought to have concerns about the plans to cut nearly 拢5bn from the welfare bill by restricting personal independence payments (PIP) and the health top-up to Universal Credit.

Charities say the changes will have a "catastrophic" effect on vulnerable people.

The chair of the Commons' Work and Pensions Committee wrote to the secretary of state, Liz Kendall, last month, calling on the government to delay the changes until a full assessment is carried out of the impact on employment, poverty and health.

Labour MP Debbie Abrahams wrote that while there was a case for reform to disability benefits, "the evidence indicated [these changes] might not improve outcomes for most claimants, but instead push many into poverty and further away from the labour market".

Spanish PM tells Starmer he 'succeeded where others failed' on Gibraltar

Turning away from the spending review, we've had a bit more on the news that the UK, Gibraltar and Europe have agreed a new deal on their relationship.

Downing Street says Sir Keir Starmer has spoken with Gibraltar's chief minister, Fabian Picardo, and the prime minister of Spain, Pedro Sanchez.

According to Number 10, Sanchez "congratulated" Starmer "on his leadership", adding his government "succeeded where others had failed".

This could be read as a criticism of previous Tory governments, or an acknowledgement Starmer had made concessions, depending on who you ask.

The spokesperson added: "Both leaders also agreed that this development unlocks huge opportunity to advance the bilateral relationship between the UK and Spain, on behalf of the British and Spanish people."

Downing Street said that, during the call between Starmer and Picardo, the British PM thanked Picardo "for his years of hard work, commitment, and leadership to reach an agreement 鈥� adding that it was fantastic to see that it had been profusely welcomed by all sides".

Spending review: What does it mean for me?

The chancellor has unveiled her long-awaited spending review, which sets out detailed plans for how individual government departments are funded over the next three years.

Rachel Reeves says departmental budgets will grow by an average of 2.3% a year, prioritising health, defence and infrastructure projects - but how will this be paid for? And does this make a change for working people as promised by her government?

In today's episode, political correspondent Tamara Cohen speaks to economics and data editor Ed Conway about the ambitious figures.

Closing asylum hotels will mean little if small boat crossings continue

By Becky Johnson, social affairs correspondent

There are more than 30,000 asylum seekers currently in hotels. 

The government says it will invest more in clearing the backlog of claims, but around half of people are usually successful - more when you count those allowed to stay following an appeal. 

They'll all need to live somewhere.

Even as Rachel Reeves prepared her speech, more boats were arriving on the Kent coast. With a steady flow of arrivals it will be impossible to completely clear the backlog. 

Some form of accommodation will be needed.

Watch: Chancellor vows to end use of asylum hotels

Serco, which has a government contract for housing asylum seekers, is advertising for private landlords who may be interested in renting their properties. 

That has the potential to create competition with local residents looking for places to live - it could push prices up and reduce supply.

That risks cancelling at least some benefits of measures announced by the government to tackle the UK's continuing housing crisis.

Closing hotels to migrants may be a vote winner - but it won't solve the problems created by tens of thousands of new arrivals each year.