🔗 Share this article

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

In comments to the BBC, she noted that curbing inflation is a shared task of both the government and the Bank of England.

The UK's inflation rate is expected to be the highest among the G7 advanced economies this year and next.

Potential Utility Cost Measures

It is understood the government could take action to lower utility costs, such as by reducing the present 5% level of VAT charged on energy.

An additional possibility is to cut some of the policy costs presently included in bills.

Fiscal Constraints and Analyst Predictions

The administration will obtain the next assessment from the independent fiscal watchdog, the OBR, on the start of the week, which will reveal how much room there is for these actions.

The consensus from the majority of experts is that Reeves will have to introduce higher taxes or budget cuts in order to adhere to her voluntary borrowing rules.

Earlier on Thursday, estimates suggested there was a twenty-two billion pound gap for the Treasury chief to address, which is at the lower end of forecasts.

"It is a joint responsibility between the Bank of England and the administration to continue tackling some of the drivers of price increases," Reeves informed the BBC in the US capital, at the conferences of the IMF and global financial institution.

Revenue Pledges and Global Issues

While much of the attention has been on expected tax rises, the chancellor said the most recent figures from the OBR had not altered her pledge to manifesto promises not to raise tax levels on income tax, VAT or National Insurance.

She attributed an "uncertain world" with growing geopolitical and commercial issues for the Budget tax moves, likely to be directed on those "with the broadest shoulders."

Global Trade Disputes

Addressing apprehensions about the United Kingdom's commercial links with China she said: "The UK's national security always are paramount."

Recent statement by China to increase export controls on rare earths and other resources that are crucial for high-technology production led US President the US President to suggest an additional 100% tariff on goods from China, increasing the risk of an full-scale commercial conflict between the two global powers.

The American finance chief labeled the Chinese decision "commercial pressure" and "a global supply chain power grab."

Questioned on accepting the US offer to participate in its battle with China, Reeves said she was "very concerned" by China's measures and urged the Beijing authorities "not to put up barriers and limit trade."

She said the decision was "bad for the global economy and causes additional challenges."

"I believe there are areas where we must address China, but there are also valuable prospects to export to Chinese markets, including banking sector and other sectors of the economic system. We've got to achieve that equilibrium right."

The Treasury chief also stated she was working with international partners "on our own critical minerals strategy, so that we are reduced dependence."

NHS Medicine Costs and Investment

The Chancellor also admitted that the cost the National Health Service pays for drugs could increase as a result of ongoing negotiations with the Trump administration and its drugs companies, in return for lower tariffs and capital.

A number of the biggest global pharmaceutical manufacturers have said recently that they are either halting or scrapping operations in the United Kingdom, with some blaming the insufficient payments they are getting.

Last month, the government science advisor said the cost the NHS spends on medicines would need to increase to stop businesses and drug research funding departing from the United Kingdom.

Reeves told media: "We have seen because of the payment system, that drug testing, new drugs have not been available in the UK in the way that they are in other EU nations."

"Our aim is to ensure that individuals receiving care from the National Health Service are can access the best critical medicines in the globe. And so we are examining this situation, and... aiming to secure more investment into the UK."