🔗 Share this article

Treasury head Rachel Reeves has announced she is planning "targeted action to tackle household expense issues" in next month's Budget.

Speaking to media outlets, she stated that lowering price rises is a collective task of both the administration and the central bank.

The United Kingdom's inflation rate is projected to be the most elevated among the Group of Seven industrialized countries this year and the following year.

Possible Energy Bill Measures

Reports indicate the government could take action to reduce utility costs, for example by slashing the present 5% rate of VAT charged on energy supplies.

A further option is to lower some of the regulatory levies currently included in household expenses.

Fiscal Limitations and Analyst Expectations

The administration will obtain the latest draft from the official forecaster, the OBR, on the start of the week, which will clarify how much room there is for these measures.

The view from most experts is that Reeves will have to introduce higher taxes or spending cuts in order to meet her declared borrowing rules.

Earlier on Thursday, analysis showed there was a £22 billion gap for the chancellor to fill, which is at the lower end of expectations.

"There's a collective responsibility between the Bank of England and the government to further reduce some of the causes of inflation," the Chancellor informed the BBC in Washington, at the annual meetings of the International Monetary Fund and World Bank.

Tax Pledges and Global Concerns

While a great deal of the attention has been on expected tax rises, the Treasury chief said the latest data from the fiscal watchdog had not altered her commitment to campaign commitments not to increase rates on income tax, sales tax or social security contributions.

She attributed an "unpredictable global environment" with rising geopolitical and commercial tensions for the fiscal revenue measures, likely to be directed on those "with the broadest shoulders."

Global Trade Tensions

Referring to worries about the UK's trade ties with China she said: "The UK's security interests always take priority."

Recent announcement by Chinese authorities to strengthen trade restrictions on rare earths and other resources that are crucial for advanced tech production led American leader Donald Trump to threaten an further 100% tariff on imports from China, raising the prospect of an full-scale trade war between the two global powers.

The American finance chief labeled China's move "commercial pressure" and "a global supply chain control attempt."

Questioned on accepting the American proposal to join its battle with China, the Chancellor said she was "very concerned" by Chinese actions and urged the Chinese government "to avoid restrictions and limit trade."

She said the move was "harmful for the world economy and generates additional obstacles."

"It is my opinion there are areas where we should challenge Chinese policies, but there are also valuable opportunities to sell into Chinese markets, including banking sector and other sectors of the economy. We've got to achieve that balance right."

The chancellor also stated she was collaborating with international partners "on our own essential resources strategy, so that we are less reliant."

Health Service Drug Costs and Investment

Reeves also acknowledged that the cost the National Health Service spends on medicines could go up as a consequence of ongoing discussions with the US government and its pharmaceutical firms, in return for reduced taxes and capital.

Some of the biggest global drug companies have said in recent statements that they are either pausing or canceling operations in the United Kingdom, with several blaming the modest returns they are obtaining.

Last month, the government science advisor said the price the NHS spends on drugs would must go up to prevent firms and drug research funding departing from the UK.

The Chancellor stated to the BBC: "It has been observed due to the payment system, that clinical trials, innovative medicines have not been offered in the United Kingdom in the manner that they are in other EU nations."

"We want to guarantee that individuals receiving care from the National Health Service are able to access the best life-saving drugs in the world. And so we are reviewing all of that, and... seeking to secure more investment into Britain."