🔗 Share this article

Treasury head Reeves has announced she is planning "targeted measures to tackle cost of living challenges" in the forthcoming Budget.

In comments to the BBC, she noted that curbing inflation is a shared duty of both the government and the Bank of England.

The United Kingdom's inflation rate is projected to be the highest among the G7 advanced economies this year and next.

Potential Utility Cost Measures

Reports indicate the administration could intervene to bring down energy bills, such as by cutting the current 5% level of value-added tax applied on energy.

An additional option is to reduce some of the regulatory levies presently included in household expenses.

Budgetary Constraints and Expert Expectations

The government will obtain the next report from the independent fiscal watchdog, the Office for Budget Responsibility, on the start of the week, which will clarify how much room there is for these actions.

The expectation from the majority of experts is that Reeves will have to introduce higher taxes or expenditure reductions in order to fulfill her self-imposed fiscal targets.

Earlier on Thursday, analysis showed there was a £22bn gap for the chancellor to fill, which is at the more modest range of forecasts.

"There's a collective job between the Bank of England and the government to further reduce some of the causes of inflation," the Chancellor stated to the BBC in the US capital, at the conferences of the International Monetary Fund and World Bank.

Tax Pledges and International Issues

While much of the focus has been on expected tax rises, the chancellor said the latest figures from the OBR had not altered her commitment to manifesto promises not to raise rates on income tax, VAT or social security contributions.

She attributed an "unpredictable world" with rising geopolitical and trade tensions for the fiscal revenue measures, likely to be targeted on those "with the broadest shoulders."

International Trade Tensions

Commenting on apprehensions about the United Kingdom's trade ties with China she said: "Our security interests always take priority."

Recent statement by Chinese authorities to tighten trade restrictions on critical minerals and other materials that are crucial for advanced tech production led US President Donald Trump to threaten an extra 100% import tax on goods from the Asian country, increasing the prospect of an all-out commercial conflict between the two global powers.

The US Treasury Secretary labeled China's decision "economic coercion" and "a international production control attempt."

Inquired about considering the US offer to participate in its battle with China, Reeves said she was "extremely troubled" by Chinese measures and called on the Beijing authorities "not to put up barriers and limit trade."

She said the action was "harmful for the international commerce and creates additional obstacles."

"I believe there are fields where we need to challenge Chinese policies, but there are also valuable prospects to export to Chinese markets, including banking sector and other areas of the economy. We've got to achieve that equilibrium right."

The chancellor also affirmed she was collaborating with G7 counterparts "regarding our own essential resources plan, so that we are less reliant."

NHS Drug Costs and Funding

Reeves also acknowledged that the cost the National Health Service spends on drugs could increase as a result of current discussions with the US government and its drugs companies, in return for reduced taxes and capital.

Some of the biggest global drug companies have said recently that they are either delaying or abandoning investments in the UK, with several attributing the modest returns they are obtaining.

Recently, the Science Minister said the price the NHS pays for medicines would need to rise to stop firms and pharmaceutical investment leaving the United Kingdom.

Reeves stated to media: "We have seen because of the cost structure, that clinical trials, innovative medicines have not been available in the UK in the extent that they are in other continental states."

"The objective is to make sure that individuals receiving treatment from the National Health Service are can obtain the best life-saving drugs in the world. And so we are examining this situation, and... looking to secure more investment into Britain."