🔗 Share this article

Treasury head Rachel Reeves has revealed she is planning "specific steps to deal with household expense issues" in next month's Budget.

In comments to the BBC, she stated that reducing inflation is a collective responsibility of both the government and the Bank of England.

The United Kingdom's price growth is expected to be the highest among the G7 industrialized countries this year and the following year.

Possible Energy Bill Measures

Sources suggest the government could take action to bring down utility costs, such as by slashing the present 5% level of value-added tax applied on energy supplies.

An additional approach is to cut some of the government charges presently included in household expenses.

Budgetary Limitations and Expert Predictions

The government will obtain the next assessment from the official forecaster, the Office for Budget Responsibility, on the start of the week, which will reveal how much scope there is for these actions.

The expectation from most economists is that Reeves will have to declare tax increases or budget cuts in order to adhere to her declared debt limits.

Previously on the same day, estimates showed there was a £22 billion gap for the chancellor to address, which is at the more modest range of projections.

"There's a joint responsibility between the central bank and the government to further reduce some of the sources of price increases," Reeves told the BBC in Washington, at the conferences of the International Monetary Fund and World Bank.

Tax Pledges and International Issues

While much of the focus has been on probable tax rises, the chancellor said the latest data from the OBR had not altered her commitment to manifesto promises not to raise rates on earnings tax, VAT or social security contributions.

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

International Economic Tensions

Referring to concerns about the UK's economic relations with the Asian nation she said: "Our security interests invariably take priority."

Recent announcement by Chinese authorities to tighten trade restrictions on critical minerals and other resources that are crucial for advanced tech production led US President the US President to threaten an further 100% tariff on goods from the Asian country, raising the risk of an all-out trade war between the two economic giants.

The American finance chief labeled the Chinese move "economic coercion" and "a global supply chain control attempt."

Asked about accepting the American proposal to join its battle with China, Reeves said she was "deeply worried" by Chinese measures and urged the Beijing authorities "to avoid restrictions and restrict access."

She said the decision was "bad for the international commerce and generates additional challenges."

"In my view there are sectors where we should confront Chinese policies, but there are also significant prospects to export to Chinese markets, including banking sector and other sectors of the economic system. We've got to achieve that equilibrium correct."

The chancellor also confirmed she was cooperating with G7 counterparts "on our own critical minerals plan, so that we are less reliant."

Health Service Drug Costs and Investment

The Chancellor also acknowledged that the price the National Health Service spends on medicines could increase as a result of current negotiations with the Trump administration and its drugs companies, in return for lower tariffs and investment.

A number of the world's largest drug companies have said in recent statements that they are either pausing or canceling investments in the United Kingdom, with several blaming the insufficient payments they are receiving.

Recently, the government science advisor said the cost the NHS pays for medicines would have to increase to stop companies and drug research funding departing from the UK.

Reeves told the BBC: "It has been observed because of the pricing regime, that medical research, innovative medicines have not been available in the UK in the way that they are in other European countries."

"The objective is to make sure that individuals getting treatment from the National Health Service are able to obtain the top life-saving treatments in the world. And so we are reviewing this situation, and... aiming to secure additional capital into Britain."