🔗 Share this article

Treasury head Rachel Reeves has announced she is planning "specific action to deal with household expense challenges" in next month's Budget.

Speaking to the BBC, she emphasized that reducing inflation is a collective 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 Energy Bill Measures

It is understood the government could intervene to lower utility costs, for instance by reducing the current 5% level of value-added tax applied on energy supplies.

Another possibility is to reduce some of the government charges currently included in bills.

Budgetary Constraints and Expert Expectations

The government will obtain the next assessment from the official forecaster, the OBR, on the start of the week, which will reveal how much space there is for these measures.

The consensus from the majority of analysts is that Reeves will have to introduce tax increases or expenditure reductions in order to fulfill her declared debt limits.

Previously on Thursday, analysis indicated there was a £22 billion gap for the chancellor to fill, which is at the more modest range of projections.

"It is a collective responsibility between the Bank of England and the government to further reduce some of the causes of price increases," Reeves informed the BBC in the US capital, at the annual meetings of the International Monetary Fund and global financial institution.

Tax Commitments and Global Issues

While much of the focus has been on likely tax rises, the chancellor said the most recent data from the fiscal watchdog had not altered her pledge to campaign commitments not to raise rates on earnings tax, sales tax or social security contributions.

She attributed an "uncertain global environment" with increasing geopolitical and commercial issues for the fiscal tax moves, likely to be focused on those "wealthiest."

Global Economic Disputes

Commenting on apprehensions about the UK's commercial links with the Asian nation she said: "The UK's security interests invariably come first."

Last week's announcement by China to tighten export controls on critical minerals and other materials that are essential for advanced tech manufacturing led US President the US President to threaten an extra 100% import tax on goods from the Asian country, raising the risk of an all-out commercial conflict between the two economic giants.

The US Treasury Secretary called the Chinese action "economic coercion" and "a international production power grab."

Asked about considering the American proposal to join its battle with the Asian nation, the Chancellor said she was "very concerned" by Chinese measures and encouraged the Chinese government "not to put up barriers and restrict access."

She said the move was "damaging for the international commerce and generates additional challenges."

"It is my opinion there are sectors where we must confront Chinese policies, but there are also important prospects to trade with Chinese markets, including banking sector and other areas of the economy. We've got to maintain that balance correct."

The chancellor also affirmed she was working with other major economies "regarding our own critical minerals plan, so that we are less reliant."

Health Service Medicine Pricing and Funding

Reeves also admitted that the price the NHS spends on pharmaceuticals could increase as a result of current negotiations with the Trump administration and its pharmaceutical firms, in return for reduced taxes and funding.

A number of the world's largest drug companies have said recently that they are either pausing or abandoning projects in the United Kingdom, with some attributing the low prices they are receiving.

Last month, the Science Minister said the cost the health service spends on medicines would must go up to halt businesses and drug research funding departing from the UK.

Reeves told media: "It has been observed because of the payment system, that drug testing, recent pharmaceuticals have not been available in the United Kingdom in the way that they are in other continental states."

"Our aim is to make sure that people receiving treatment from the National Health Service are can access the best essential medicines in the world. And so we are examining this situation, and... aiming to obtain more investment into the UK."