🔗 Share this article

Treasury head Rachel Reeves has revealed she is preparing "targeted measures to deal with cost of living issues" in the upcoming Budget.

During an interview with media outlets, she emphasized that curbing inflation is a joint responsibility of both the government and the central bank.

The UK's price growth is projected to be the highest among the G7 advanced economies this calendar year and next.

Potential Utility Cost Measures

Reports indicate the government could intervene to lower energy bills, such as by cutting the present 5% rate of value-added tax applied on energy supplies.

A further possibility is to reduce some of the government charges presently added to household expenses.

Budgetary Constraints and Analyst Expectations

The government will receive the next report from the official forecaster, the Office for Budget Responsibility, on the start of the week, which will reveal how much scope there is for such measures.

The expectation from most economists is that Reeves will have to announce higher taxes or expenditure reductions in order to adhere to her declared borrowing rules.

Previously on Thursday, estimates suggested there was a £22bn gap for the chancellor to fill, which is at the more modest range of forecasts.

"There's a shared responsibility between the Bank of England and the government to continue tackling some of the sources of inflation," Reeves told the BBC in the US capital, at the yearly gatherings of the International Monetary Fund and global financial institution.

Tax Commitments and Global Concerns

While much of the focus has been on probable tax increases, the chancellor said the latest figures from the fiscal watchdog had not changed her commitment to manifesto promises not to increase rates on income tax, VAT or social security contributions.

She blamed an "uncertain global environment" with increasing international and trade tensions for the Budget tax moves, likely to be directed on those "most able to pay."

International Economic Disputes

Commenting on apprehensions about the United Kingdom's commercial links with China she said: "The UK's national security always come first."

Last week's announcement by Chinese authorities to tighten trade restrictions on critical minerals and other materials that are essential for advanced tech production led US President Donald Trump to suggest an extra 100% import tax on goods from China, raising the prospect of an all-out trade war between the two largest economies.

The American finance chief called China's action "economic coercion" and "a global supply chain power grab."

Questioned on accepting the US offer to join its conflict with China, Reeves said she was "very concerned" by China's measures and urged the Chinese government "not to put up barriers and limit trade."

She said the move was "damaging for the world economy and generates additional headwinds."

"In my view there are areas where we must confront China, but there are also significant opportunities to trade with China's economy, including banking sector and other areas of the economy. We've got to maintain that balance appropriate."

The chancellor also confirmed she was cooperating with other major economies "regarding our own critical minerals approach, so that we are reduced dependence."

Health Service Medicine Costs and Investment

Reeves also recognized that the cost the NHS spends on pharmaceuticals could rise as a consequence of ongoing talks with the Trump administration and its pharmaceutical firms, in exchange for reduced taxes and funding.

Some of the world's largest drug companies have said lately that they are either delaying or scrapping operations in the UK, with several blaming the insufficient payments they are receiving.

Recently, the government science advisor said the price the NHS spends on drugs would have to go up to stop firms and drug research funding leaving the United Kingdom.

Reeves informed media: "We have seen as a result of the pricing regime, that drug testing, new drugs have not been offered in the UK in the manner that they are in other EU nations."

"We want to make sure that individuals getting treatment from the National Health Service are can access the best life-saving treatments in the world. And so we are reviewing all of that, and... looking to obtain increased funding into Britain."