🔗 Share this article

Chancellor Reeves has revealed she is planning "targeted measures to address cost of living pressures" in next month's Budget.

During an interview with the BBC, she noted that lowering price rises is a shared duty of both the government and the central bank.

The UK's inflation rate is expected to be the highest among the Group of Seven industrialized countries this year and next.

Potential Energy Bill Interventions

It is understood the government could intervene to bring down utility costs, for instance by cutting the current 5% rate of value-added tax charged on energy supplies.

Another approach is to lower some of the government charges presently included in bills.

Fiscal Limitations and Analyst Predictions

The administration will receive the next report from the official forecaster, the OBR, on the start of the week, which will show how much room there is for these actions.

The expectation from most economists is that Reeves will have to introduce higher taxes or expenditure reductions in order to adhere to her declared fiscal targets.

Earlier on the same day, calculations suggested there was a £22 billion gap for the Treasury chief to address, which is at the more modest range of projections.

"It is a joint responsibility between the Bank of England and the government to continue tackling some of the sources of inflation," Reeves informed reporters in the US capital, at the yearly gatherings of the IMF and World Bank.

Revenue Pledges and Global Concerns

While a great deal of the focus has been on probable tax rises, the chancellor said the latest information from the fiscal watchdog had not changed her commitment to election pledges not to raise tax levels on income tax, sales tax or National Insurance.

She attributed an "uncertain global environment" with growing geopolitical and trade concerns for the fiscal revenue measures, likely to be focused on those "most able to pay."

International Trade Disputes

Addressing worries about the UK's commercial links with China she said: "Our security interests always take priority."

Recent statement by Chinese authorities to strengthen trade restrictions on rare earths and other materials that are crucial for advanced tech manufacturing led US President the US President to suggest an additional 100% tariff on imports from China, increasing the possibility of an all-out commercial conflict between the two largest economies.

The US Treasury Secretary described China's decision "economic coercion" and "a global supply chain power grab."

Inquired about accepting the US offer to join its conflict with China, the Chancellor said she was "deeply worried" by Chinese measures and called on the Beijing authorities "to avoid restrictions and limit trade."

She said the action was "damaging for the world economy and creates further challenges."

"It is my opinion there are sectors where we need to confront China, but there are also important chances to trade with Chinese markets, including banking sector and other sectors of the economy. We've got to get that balance appropriate."

The chancellor also confirmed she was collaborating with other major economies "on our own critical minerals plan, so that we are less reliant."

NHS Medicine Pricing and Funding

The Chancellor also recognized that the price the National Health Service pays for drugs could go up as a result of ongoing discussions with the US government and its pharmaceutical firms, in exchange for reduced taxes and investment.

Some of the biggest global drug companies have said recently that they are either halting or scrapping investments in the United Kingdom, with several attributing the insufficient payments they are obtaining.

Recently, the Science Minister said the price the NHS pays for medicines would must go up to stop businesses and pharmaceutical investment leaving the UK.

Reeves stated to media: "We have seen due to the payment system, that medical research, innovative medicines have not been offered in the United Kingdom in the manner that they are in other EU nations."

"The objective is to ensure that patients receiving care from the National Health Service are can obtain the finest essential treatments in the world. And so we are looking at all of that, and... aiming to secure increased capital into Britain."