For decades, the savings from declining defence spending were effectively ploughed into the health service. Those ‘peace dividend’ days are goneOn 11 June, the government will unveil its long-awaited spending review, laying out how it wants to spend more than £600bn annually on public services over the next few years. That’s about a fifth of the entire British economy. The choices made over funding for the NHS, schools, courts, prisons and much more besides will shape life in the UK in the coming years. It’s no exaggeration to say this could be the defining domestic policy moment of this parliament.Rachel Reeves’s first budget included a big tax rise and a two-year increase in borrowing to boost spending on public services. For future years, the chancellor has repeatedly reaffirmed her “ironclad” commitment to borrow only to invest. Such is the dismal state of the public finances that even with tax revenues that are high by historical standards, spending growth in the coming years will be relatively modest. Overall day-to-day departmental spending is set to rise by an average of just 1.2% above inflation over the next three years. This will make the spending review tough. Allocating spending across departments will inevitably mean picking winners and losers.Helen Miller is the incoming director of the Institute for Fiscal Studies