🔗 Share this article

Chancellor Rachel Reeves has revealed she is preparing "focused steps to tackle household expense challenges" in the upcoming financial statement.

Speaking to the BBC, she noted that lowering price rises is a shared responsibility of both the administration and the Bank of England.

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

Possible Utility Bill Interventions

Reports indicate the administration could take action to reduce utility costs, for example by reducing the current 5% rate of value-added tax charged on energy.

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

Fiscal Constraints and Analyst Expectations

The administration will receive the next report from the independent fiscal watchdog, the Office for Budget Responsibility, on the start of the week, which will reveal how much space there is for these measures.

The consensus from the majority of experts is that the Chancellor will have to announce higher taxes or spending cuts in order to meet her voluntary debt limits.

Earlier on Thursday, estimates showed there was a £22 billion shortfall for the Treasury chief to address, which is at the lower end of projections.

"It is a joint task between the central bank and the government to further reduce some of the causes of inflation," Reeves told the BBC in the US capital, at the yearly gatherings of the International Monetary Fund and World Bank.

Tax Pledges and Global Issues

While a great deal of the focus has been on likely tax rises, the Treasury chief said the latest data from the OBR had not altered her commitment to manifesto promises not to raise tax levels on earnings tax, sales tax or social security contributions.

She blamed an "unpredictable world" with growing international and commercial tensions for the Budget tax moves, probably to be focused on those "most able to pay."

Global Trade Tensions

Commenting on apprehensions about the UK's commercial links with China she said: "The UK's security interests invariably are paramount."

Last week's announcement by China to increase export controls on rare earths and other materials that are key for high-technology manufacturing led American leader the US President to threaten an extra 100% tariff on imports from China, increasing the possibility of an full-scale commercial conflict between the two global powers.

The American finance chief described China's action "economic coercion" and "a international production control attempt."

Asked about considering the American proposal to participate in its conflict with the Asian nation, the Chancellor said she was "very concerned" by China's actions and urged the Chinese government "to avoid restrictions and limit trade."

She said the action was "bad for the international commerce and causes additional challenges."

"In my view there are areas where we should address Chinese policies, but there are also significant prospects to trade with Chinese markets, including banking sector and other areas of the economy. We've got to maintain that balance correct."

The Treasury chief also affirmed she was collaborating with G7 counterparts "on our own essential resources approach, so that we are more independent."

NHS Medicine Pricing and Investment

The Chancellor also recognized that the price the NHS pays for medicines could go up as a result of ongoing discussions with the Trump administration and its drugs companies, in return for reduced taxes and investment.

Some of the world's largest pharmaceutical manufacturers have said in recent statements that they are either delaying or abandoning projects in the UK, with some blaming the modest returns they are getting.

Recently, the government science advisor said the price the NHS pays for medicines would must rise to halt businesses and pharmaceutical investment departing from the United Kingdom.

The Chancellor informed media: "It has been observed due to the payment system, that medical research, new drugs have not been provided in the United Kingdom in the manner that they are in other EU nations."

"Our aim is to make sure that patients getting treatment from the NHS are able to access the top life-saving medicines in the world. And so we are reviewing these issues, and... looking to obtain more funding into Britain."