🔗 Share this article

Treasury head Rachel Reeves has announced she is planning "specific action to address cost of living pressures" in next month's Budget.

In comments to the BBC, she stated that reducing price rises is a collective task of both the administration and the Bank of England.

The United Kingdom's inflation rate is projected to be the most elevated among the G7 industrialized countries this calendar year and the following year.

Potential Energy Cost Measures

Sources suggest the government could take action to reduce energy bills, for instance by cutting the current 5% rate of VAT charged on energy.

Another option is to cut some of the government charges currently added to bills.

Budgetary Limitations and Analyst Expectations

The government will receive the next assessment from the independent fiscal watchdog, the OBR, on Monday, which will show how much room there is for such measures.

The expectation from the majority of economists is that the Chancellor will have to introduce tax increases or expenditure reductions in order to adhere to her declared borrowing rules.

Earlier on the same day, analysis indicated there was a twenty-two billion pound deficit for the chancellor to fill, which is at the lower end of expectations.

"There's a shared task between the Bank of England and the government to bear down further on some of the drivers of price increases," the Chancellor informed the BBC in the US capital, at the conferences of the IMF and global financial institution.

Revenue Pledges and International Issues

While much of the attention has been on expected tax increases, the chancellor said the latest information from the fiscal watchdog had not changed her pledge to campaign commitments not to raise tax levels on income tax, VAT or social security contributions.

She attributed an "unpredictable global environment" with rising geopolitical and trade concerns for the fiscal tax moves, likely to be focused on those "most able to pay."

Global Economic Disputes

Referring to worries about the United Kingdom's commercial links with the Asian nation she said: "The UK's national security invariably are paramount."

Last week's statement by China to increase export controls on critical minerals and other resources that are crucial for advanced tech production led American leader Donald Trump to threaten an further 100% import tax on imports from China, increasing the risk of an full-scale commercial conflict between the two economic giants.

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

Asked about accepting the US offer to participate in its conflict with China, the Chancellor said she was "very concerned" by Chinese actions and called on the Beijing authorities "to avoid restrictions and limit trade."

She said the move was "harmful for the global economy and creates additional obstacles."

"It is my opinion there are areas where we should address China, but there are also significant chances to trade with Chinese markets, including financial services and other areas of the economy. We've got to get that balance correct."

The Treasury chief also affirmed she was cooperating with other major economies "on our own critical minerals approach, so that we are less reliant."

Health Service Drug Pricing and Funding

The Chancellor also acknowledged that the price the National Health Service pays for pharmaceuticals could rise as a result of ongoing discussions with the Trump administration and its drugs companies, in return for reduced taxes and capital.

Some of the world's largest drug companies have said lately that they are either pausing or canceling operations in the United Kingdom, with several blaming the insufficient payments they are receiving.

Recently, the government science advisor said the price the health service pays for drugs would need to go up to stop companies and pharmaceutical investment leaving the UK.

The Chancellor told the BBC: "It has been observed because of the pricing regime, that drug testing, recent pharmaceuticals have not been offered in the United Kingdom in the extent that they are in other continental states."

"The objective is to ensure that individuals receiving treatment from the National Health Service are can receive the best essential medicines in the globe. And so we are looking at this situation, and... aiming to secure additional funding into Britain."