🔗 Share this article

Chancellor Rachel Reeves has announced she is planning "focused steps to tackle household expense pressures" in next month's Budget.

Speaking to the BBC, she noted that lowering inflation is a joint responsibility of both the administration and the Bank of England.

The United Kingdom's price growth is forecast to be the highest among the G7 industrialized countries this calendar year and next.

Potential Energy Cost Measures

It is understood the administration could intervene to reduce energy bills, for instance by reducing the present 5% level of VAT charged on energy supplies.

An additional possibility is to reduce some of the government charges currently included in household expenses.

Budgetary Constraints and Analyst Expectations

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

The expectation from most analysts is that the Chancellor will have to announce tax increases or budget cuts in order to fulfill her declared borrowing rules.

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

"It is a shared job between the Bank of England and the administration to continue tackling some of the sources of inflation," the Chancellor stated to reporters in the US capital, at the yearly gatherings of the IMF and World Bank.

Revenue Pledges and Global Issues

While much of the focus has been on probable tax rises, the Treasury chief said the most recent figures from the OBR had not changed her pledge to manifesto promises not to raise rates on income tax, VAT or National Insurance.

She attributed an "unpredictable global environment" with growing geopolitical and commercial tensions for the fiscal revenue measures, probably to be focused on those "wealthiest."

Global Economic Disputes

Commenting on concerns about the UK's economic relations with China she said: "The UK's national security always are paramount."

Last week's declaration by China to strengthen trade restrictions on critical minerals and other resources that are essential for high-technology manufacturing led American leader the US President to suggest an extra 100% import tax on goods from China, increasing the risk of an full-scale commercial conflict between the two economic giants.

The American finance chief called the Chinese action "commercial pressure" and "a international production power grab."

Inquired about accepting the American proposal to join its dispute with the Asian nation, Reeves said she was "extremely troubled" by China's measures and called on the Beijing authorities "not to put up barriers and restrict access."

She said the move was "harmful for the international commerce and causes further obstacles."

"In my view there are areas where we should address Chinese policies, but there are also valuable opportunities to trade with China's economy, including banking sector and other sectors of the economy. We've got to achieve that balance right."

The Treasury chief also affirmed she was collaborating with G7 counterparts "on our own critical minerals approach, so that we are less reliant."

NHS Medicine Pricing and Funding

Reeves also acknowledged that the price the NHS spends on pharmaceuticals could go up as a result of current negotiations with the Trump administration and its drugs companies, in return for lower tariffs and funding.

A number of the world's largest pharmaceutical manufacturers have said lately that they are either halting or abandoning operations in the UK, with some attributing the modest returns they are obtaining.

Recently, the Science Minister said the cost the health service spends on drugs would must increase to stop companies and pharmaceutical investment departing from the UK.

The Chancellor informed media: "It has been observed as a result of the payment system, that drug testing, recent pharmaceuticals have not been provided in the UK in the way that they are in other EU nations."

"We want to ensure that people receiving treatment from the NHS are able to receive the finest critical drugs in the world. And so we are examining all of that, and... looking to obtain increased investment into the UK."