🔗 Share this article

Treasury head Rachel Reeves has revealed she is planning "targeted steps to deal with cost of living challenges" in the forthcoming Budget.

Speaking to the BBC, she emphasized that curbing inflation is a collective responsibility of both the government and the central bank.

The UK's inflation rate is projected to be the most elevated among the Group of Seven developed nations this year and next.

Possible Energy Cost Measures

Reports indicate the government could intervene to bring down energy bills, for example by cutting the present 5% rate of value-added tax charged on energy supplies.

An additional approach is to reduce some of the policy costs currently included in household expenses.

Fiscal Limitations and Analyst Predictions

The government will receive the next draft from the official forecaster, the Office for Budget Responsibility, on Monday, which will reveal how much room there is for such actions.

The expectation from the majority of analysts is that the Chancellor will have to announce tax rises or expenditure reductions in order to fulfill her self-imposed debt limits.

Earlier on the same day, calculations suggested there was a twenty-two billion pound gap for the Treasury chief to address, which is at the lower end of forecasts.

"It is a shared responsibility between the Bank of England and the administration to continue tackling some of the sources of price increases," the Chancellor told the BBC in the US capital, at the annual meetings of the IMF and World Bank.

Revenue Pledges and International Issues

While much of the attention has been on likely tax rises, the Treasury chief said the most recent information from the OBR had not altered her pledge to manifesto promises not to increase tax levels on income tax, sales tax or National Insurance.

She attributed an "uncertain global environment" with increasing geopolitical and trade concerns for the Budget tax moves, probably to be directed on those "wealthiest."

Global Trade Disputes

Addressing concerns about the UK's trade ties with China she said: "Our national security always are paramount."

Recent announcement by Chinese authorities to tighten trade restrictions on rare earths and other materials that are essential for advanced tech production led US President the US President to suggest an further 100% tariff on goods from China, increasing the prospect of an all-out commercial conflict between the two global powers.

The US Treasury Secretary called the Chinese decision "commercial pressure" and "a global supply chain control attempt."

Questioned on considering the US offer to join its battle with the Asian nation, the Chancellor said she was "deeply worried" by Chinese actions and encouraged the Chinese government "to avoid restrictions and limit trade."

She said the decision was "harmful for the global economy and creates further headwinds."

"In my view there are sectors where we need to challenge China, but there are also significant chances to trade with China's economy, including financial services and other areas of the economy. We've got to achieve that equilibrium appropriate."

The chancellor also confirmed she was collaborating with international partners "regarding our own critical minerals plan, so that we are reduced dependence."

Health Service Medicine Costs and Funding

The Chancellor also acknowledged that the cost the NHS pays for drugs could increase as a result of ongoing negotiations with the US government and its drugs companies, in return for lower tariffs and investment.

A number of the world's largest drug companies have said in recent statements that they are either delaying or abandoning investments in the UK, with some blaming the low prices they are getting.

Recently, the Science Minister said the price the health service pays for medicines would must go up to halt businesses and pharmaceutical investment departing from the UK.

Reeves stated to the BBC: "It has been observed because of the pricing regime, that clinical trials, new drugs have not been offered in the UK in the way that they are in other European countries."

"The objective is to make sure that patients getting care from the NHS are able to obtain the top essential treatments in the globe. And so we are examining this situation, and... looking to attract more capital into Britain."