🔗 Share this article

Chancellor Rachel Reeves has announced she is preparing "specific measures to deal with cost of living issues" in next month's Budget.

In comments to the BBC, she stated that reducing price rises is a joint duty of both the administration and the central bank.

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

Possible Utility Bill Interventions

Reports indicate the government could take action to bring down energy bills, for instance by cutting the present 5% rate of value-added tax applied on energy.

An additional approach is to cut some of the government charges presently included in bills.

Budgetary Constraints and Expert Predictions

The government will obtain the latest report from the independent fiscal watchdog, the OBR, on the start of the week, which will show how much scope there is for these actions.

The view from the majority of economists is that Reeves will have to introduce higher taxes or spending cuts in order to adhere to her declared fiscal targets.

Previously on the same day, analysis showed there was a £22 billion deficit for the chancellor to fill, which is at the lower end of forecasts.

"There's a collective task between the Bank of England and the government to further reduce some of the causes of price increases," Reeves informed reporters in Washington, at the yearly gatherings of the IMF and global financial institution.

Revenue Commitments and International Concerns

While much of the focus has been on probable tax increases, the Treasury chief said the latest figures from the OBR had not altered her commitment to election pledges not to raise rates on income tax, VAT or National Insurance.

She blamed an "uncertain world" with rising international and trade tensions for the fiscal revenue measures, likely to be targeted on those "wealthiest."

International Trade Disputes

Referring to concerns about the UK's trade ties with China she said: "Our security interests invariably come first."

Last week's declaration by China to strengthen trade restrictions on critical minerals and other resources that are essential for advanced tech production led American leader the US President to threaten an additional 100% tariff on goods from China, raising the possibility of an all-out trade war between the two global powers.

The US Treasury Secretary labeled China's action "commercial pressure" and "a global supply chain power grab."

Questioned on accepting the American proposal to participate in its dispute with the Asian nation, Reeves said she was "extremely troubled" by Chinese measures and encouraged the Beijing authorities "not to put up barriers and limit trade."

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

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

The Treasury chief also affirmed she was working with international partners "regarding our own critical minerals plan, so that we are less reliant."

NHS Medicine Pricing and Funding

The Chancellor also admitted that the price the National Health Service pays for pharmaceuticals could go up as a consequence of ongoing discussions with the US government and its pharmaceutical firms, in exchange for lower tariffs and funding.

A number of the world's largest pharmaceutical manufacturers have said lately that they are either delaying or scrapping investments in the UK, with some blaming the insufficient payments they are obtaining.

Last month, the government science advisor said the price the NHS spends on drugs would need to increase to prevent firms and drug research funding departing from the United Kingdom.

The Chancellor stated to the BBC: "We have seen because of the pricing regime, that medical research, new drugs have not been available in the UK in the manner that they are in other European countries."

"The objective is to ensure that patients receiving treatment from the National Health Service are able to access the finest life-saving medicines in the world. And so we are reviewing these issues, and... aiming to secure increased capital into the UK."