🔗 Share this article

Chancellor Reeves has revealed she is planning "specific action to tackle household expense challenges" in the forthcoming Budget.

In comments to media outlets, she noted that reducing price rises is a collective duty of both the administration and the central bank.

The UK's inflation rate is forecast to be the highest among the Group of Seven advanced economies this calendar year and the following year.

Potential Utility Bill Measures

It is understood the administration could take action to bring down energy bills, for instance by reducing the current 5% level of value-added tax applied on energy.

An additional approach is to reduce some of the government charges currently added to bills.

Budgetary Limitations and Expert Expectations

The government will obtain the latest assessment from the independent fiscal watchdog, the OBR, on the start of the week, which will clarify how much space there is for these measures.

The consensus from the majority of analysts is that Reeves will have to declare tax rises or expenditure reductions in order to adhere to her voluntary borrowing rules.

Previously on the same day, analysis suggested there was a £22bn deficit for the Treasury chief to address, which is at the lower end of expectations.

"There's a joint responsibility between the Bank of England and the government to further reduce some of the causes of price increases," the Chancellor told reporters in Washington, at the yearly gatherings of the International Monetary Fund and global financial institution.

Revenue Commitments and International Concerns

While a great deal of the focus has been on likely tax rises, the Treasury chief said the latest information from the OBR had not altered her commitment to campaign commitments not to increase rates on earnings tax, VAT or National Insurance.

She attributed an "uncertain global environment" with rising geopolitical and commercial tensions for the Budget revenue measures, probably to be directed on those "with the broadest shoulders."

International Economic Disputes

Commenting on worries about the UK's economic relations with the Asian nation she said: "Our security interests invariably come first."

Last week's statement by Chinese authorities to increase export controls on critical minerals and other resources that are crucial for high-technology production led US President Donald Trump to suggest an additional 100% import tax on imports from the Asian country, increasing the risk of an full-scale commercial conflict between the two global powers.

The US Treasury Secretary called China's action "economic coercion" and "a global supply chain control attempt."

Inquired about accepting the American proposal to join its conflict with China, the Chancellor said she was "extremely troubled" by Chinese measures and urged the Chinese government "not to put up barriers and limit trade."

She said the decision was "bad for the international commerce and creates further obstacles."

"In my view there are areas where we should challenge Chinese policies, but there are also valuable chances to trade with China's economy, including financial services and other areas of the economic system. We've got to get that equilibrium right."

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

NHS Medicine Costs and Investment

Reeves also admitted that the cost the NHS pays for pharmaceuticals could rise as a consequence of current negotiations with the Trump administration and its drugs companies, in exchange for reduced taxes and funding.

Some of the world's largest drug companies have said recently that they are either halting or canceling projects in the UK, with several blaming the insufficient payments they are getting.

Last month, the government science advisor said the cost the NHS pays for drugs would have to increase to stop firms and pharmaceutical investment leaving the United Kingdom.

Reeves told media: "We have seen due to the payment system, that drug testing, new drugs have not been provided in the United Kingdom in the extent that they are in other EU nations."

"Our aim is to guarantee that people getting care from the National Health Service are able to access the finest critical medicines in the globe. And so we are looking at all of that, and... seeking to secure increased investment into Britain."