🔗 Share this article

Treasury head Rachel Reeves has stated she is preparing "targeted measures to deal with household expense challenges" in next month's Budget.

In comments to the BBC, she emphasized that reducing inflation is a collective responsibility of both the administration and the central bank.

The UK's inflation rate is expected to be the highest among the Group of Seven industrialized countries this calendar year and next.

Potential Energy Cost Measures

It is understood the government could take action to reduce utility costs, such as by reducing the current 5% rate of VAT applied on energy supplies.

An additional possibility is to reduce some of the regulatory levies currently added to household expenses.

Fiscal Limitations and Analyst Predictions

The administration will obtain the latest report from the independent fiscal watchdog, the Office for Budget Responsibility, on the start of the week, which will show how much space there is for such measures.

The consensus from most economists is that Reeves will have to announce higher taxes or budget cuts in order to adhere to her voluntary fiscal targets.

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

"There's a joint task between the central bank and the administration to bear down further on some of the sources of inflation," the Chancellor told reporters in the US capital, at the conferences of the IMF and World Bank.

Revenue Commitments and International Concerns

While a great deal of the focus has been on likely tax rises, the Treasury chief said the most recent data from the fiscal watchdog had not changed her vow to manifesto promises not to raise rates on income tax, sales tax or social security contributions.

She attributed an "uncertain global environment" with growing international and commercial tensions for the fiscal tax moves, likely to be directed on those "most able to pay."

Global Economic Disputes

Commenting on apprehensions about the United Kingdom's commercial links with China she said: "The UK's security interests invariably are paramount."

Recent announcement by Chinese authorities to strengthen trade restrictions on rare earths and other materials that are crucial for high-technology manufacturing led US President the US President to suggest an additional 100% import tax on imports from the Asian country, raising the possibility of an full-scale trade war between the two largest economies.

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

Questioned on considering the American proposal to join its dispute with the Asian nation, the Chancellor said she was "deeply worried" by China's actions and urged the Beijing authorities "to avoid restrictions and limit trade."

She said the decision was "bad for the world economy and creates additional obstacles."

"I believe there are sectors where we need to challenge Chinese policies, but there are also important chances to trade with China's economy, including banking sector and other sectors of the economy. We've got to achieve that balance appropriate."

The chancellor also affirmed she was working with international partners "on our own essential resources approach, so that we are less reliant."

Health Service Drug Pricing and Funding

Reeves also acknowledged that the price the National Health Service spends on drugs could rise as a result of current discussions with the US government and its pharmaceutical firms, in exchange for lower tariffs and investment.

Some of the biggest global drug companies have said lately that they are either pausing or abandoning operations in the United Kingdom, with several blaming the insufficient payments they are obtaining.

Last month, the government science advisor said the price the NHS spends on drugs would must increase to halt companies and pharmaceutical investment departing from the United Kingdom.

The Chancellor informed the BBC: "It has been observed as a result of the pricing regime, that drug testing, innovative medicines have not been offered in the UK in the extent that they are in other EU nations."

"Our aim is to make sure that individuals getting care from the National Health Service are able to access the best critical drugs in the globe. And so we are looking at this situation, and... aiming to attract increased investment into the UK."