🔗 Share this article

Chancellor Reeves has revealed she is planning "specific steps to deal with household expense pressures" in the forthcoming Budget.

Speaking to the BBC, she emphasized that curbing inflation is a collective task of both the government and the central bank.

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

Potential Energy Cost Interventions

Reports indicate the government could intervene to reduce energy bills, such as by slashing the present 5% rate of VAT charged on energy.

A further approach is to cut some of the regulatory levies presently included in household expenses.

Fiscal Limitations and Analyst Expectations

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

The expectation from the majority of economists is that Reeves will have to introduce tax increases or spending cuts in order to fulfill her voluntary debt limits.

Previously on Thursday, analysis indicated there was a £22bn deficit for the Treasury chief to fill, which is at the more modest range of expectations.

"There's a shared task between the Bank of England and the government to further reduce some of the sources of price increases," Reeves informed the BBC in the US capital, at the conferences of the International Monetary Fund and World Bank.

Revenue Commitments and International Issues

While a great deal of the focus has been on expected tax increases, the Treasury chief said the most recent information from the OBR had not changed her pledge to campaign commitments not to raise rates on earnings tax, VAT or National Insurance.

She blamed an "unpredictable world" with growing geopolitical and trade issues for the Budget revenue measures, probably to be targeted on those "most able to pay."

International Economic Tensions

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

Last week's announcement by China to tighten trade restrictions on rare earths and other resources that are crucial for high-technology manufacturing led US President the US President to propose an extra 100% tariff on goods from the Asian country, raising the prospect of an full-scale trade war between the two largest economies.

The American finance chief labeled the Chinese move "economic coercion" and "a global supply chain control attempt."

Asked about accepting the US offer to participate in its conflict with the Asian nation, Reeves said she was "deeply worried" by Chinese measures and encouraged the Chinese government "to avoid restrictions and restrict access."

She said the action was "harmful for the world economy and causes further obstacles."

"It is my opinion there are fields where we need to confront China, but there are also important opportunities to sell into Chinese markets, including banking sector and other areas of the economic system. We've got to get that balance appropriate."

The chancellor also confirmed she was cooperating with G7 counterparts "on our own essential resources approach, so that we are more independent."

Health Service Medicine Pricing and Funding

The Chancellor also acknowledged that the price the NHS pays for medicines could rise as a consequence of current talks with the US government and its drugs companies, in return for lower tariffs and funding.

Some of the biggest global pharmaceutical manufacturers have said in recent statements that they are either pausing or canceling investments in the UK, with several attributing the modest returns they are getting.

Last month, the Science Minister said the cost the NHS spends on drugs would must go up to prevent companies and drug research funding leaving the UK.

Reeves told the BBC: "We have seen because of the cost structure, that medical research, new drugs have not been available in the UK in the way that they are in other EU nations."

"Our aim is to make sure that patients getting treatment from the NHS are able to obtain the top life-saving treatments in the world. And so we are reviewing these issues, and... seeking to secure more investment into the UK."