🔗 Share this article

Chancellor Reeves has revealed she is planning "focused steps to deal with household expense challenges" in the forthcoming Budget.

Speaking to the BBC, she noted that curbing inflation is a collective duty of both the government and the central bank.

The United Kingdom's inflation rate is forecast to be the most elevated among the Group of Seven developed nations this calendar year and next.

Possible Utility Bill Measures

It is understood the administration could take action to reduce energy bills, for example by slashing the present 5% level of value-added tax charged on energy.

A further approach is to lower some of the regulatory levies currently included in household expenses.

Fiscal Limitations and Expert Predictions

The government will obtain the next assessment from the independent fiscal watchdog, the Office for Budget Responsibility, on Monday, which will show how much room there is for such actions.

The view from most economists is that Reeves will have to introduce tax rises or expenditure reductions in order to adhere to her self-imposed borrowing rules.

Previously on Thursday, estimates suggested there was a £22 billion deficit for the Treasury chief to address, which is at the lower end of forecasts.

"There's a shared job between the central bank and the administration to bear down further on some of the causes of inflation," the Chancellor stated to reporters 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 probable tax increases, the Treasury chief said the latest figures from the OBR had not changed her commitment to campaign commitments not to increase tax levels on earnings tax, sales tax or National Insurance.

She attributed an "uncertain world" with growing international and commercial tensions for the Budget revenue measures, probably to be directed on those "most able to pay."

Global Trade Tensions

Addressing worries about the UK's economic relations with the Asian nation she said: "The UK's security interests always come first."

Last week's declaration by Chinese authorities to increase trade restrictions on rare earths and other materials that are essential for advanced tech production led American leader Donald Trump to threaten an additional 100% tariff on imports from China, increasing the possibility of an all-out commercial conflict between the two economic giants.

The US Treasury Secretary called China's move "commercial pressure" and "a international production power grab."

Questioned on accepting the US offer to participate in its battle with China, the Chancellor said she was "deeply worried" by China's actions and encouraged the Beijing authorities "to avoid restrictions and limit trade."

She said the decision was "bad for the international commerce and creates further challenges."

"In my view there are fields where we should challenge China, but there are also important opportunities to sell into China's economy, including banking sector and other sectors of the economy. We've got to maintain that balance appropriate."

The chancellor also stated she was working with G7 counterparts "on our own critical minerals approach, so that we are more independent."

Health Service Drug Costs and Investment

The Chancellor also admitted that the price the National Health Service pays for pharmaceuticals could increase as a consequence of current negotiations with the US government and its drugs companies, in exchange for lower tariffs and investment.

Some of the world's largest pharmaceutical manufacturers have said in recent statements that they are either delaying or scrapping investments in the UK, with several blaming the modest returns they are getting.

Last month, the Science Minister said the cost the NHS spends on medicines would have to go up to prevent companies and drug research funding departing from the United Kingdom.

The Chancellor informed media: "It has been observed because of the cost structure, that drug testing, innovative medicines have not been available in the UK in the manner that they are in other EU nations."

"Our aim is to guarantee that patients receiving care from the NHS are can access the best critical treatments in the world. And so we are reviewing all of that, and... seeking to attract more capital into the UK."