🔗 Share this article

Treasury head Rachel Reeves has revealed she is preparing "specific steps to tackle cost of living issues" in next month's Budget.

In comments to media outlets, she stated that lowering inflation is a collective responsibility of both the government and the central bank.

The United Kingdom's price growth is projected to be the most elevated among the G7 developed nations this calendar year and the following year.

Potential Energy Bill Interventions

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

A further option is to cut some of the regulatory levies currently added to household expenses.

Budgetary Limitations and Analyst Predictions

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

The expectation from the majority of analysts is that the Chancellor will have to declare tax rises or spending cuts in order to meet her declared fiscal targets.

Previously on the same day, analysis suggested there was a twenty-two billion pound deficit for the chancellor to address, which is at the more modest range of expectations.

"It is a joint job between the central bank and the government to further reduce some of the drivers of inflation," the Chancellor stated to the BBC in Washington, at the conferences of the IMF and global financial institution.

Tax Pledges and Global Issues

While a great deal of the focus has been on expected tax increases, the Treasury chief said the latest information from the OBR had not changed her pledge to manifesto promises not to raise rates on earnings tax, VAT or National Insurance.

She blamed an "uncertain world" with growing international and commercial concerns for the fiscal revenue measures, likely to be targeted on those "wealthiest."

Global Economic Disputes

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

Recent announcement by Chinese authorities to strengthen trade restrictions on rare earths and other resources that are crucial for high-technology production led US President Donald Trump to suggest an extra 100% import tax on imports from the Asian country, increasing the prospect of an full-scale trade war between the two largest economies.

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

Inquired about considering the US offer to join its dispute with the Asian nation, the Chancellor said she was "deeply worried" by Chinese measures and urged the Chinese government "to avoid restrictions and restrict access."

She said the action was "harmful for the global economy and generates further challenges."

"It is my opinion there are fields where we need to address China, but there are also significant opportunities to trade with Chinese markets, including banking sector and other sectors of the economy. We've got to maintain that equilibrium right."

The Treasury chief also confirmed she was working with other major economies "on our own essential resources approach, so that we are less reliant."

Health Service Medicine Costs and Investment

The Chancellor also acknowledged that the price the NHS spends on pharmaceuticals could increase as a consequence of current negotiations with the US government and its pharmaceutical firms, in exchange for reduced taxes and capital.

A number of the world's largest drug companies have said in recent statements that they are either halting or abandoning projects in the United Kingdom, with several blaming the low prices they are receiving.

Recently, the Science Minister said the price the NHS pays for drugs would need to increase to prevent firms and drug research funding leaving the UK.

Reeves stated to the BBC: "We have seen due to the pricing regime, that clinical trials, new drugs have not been offered in the UK in the manner that they are in other continental states."

"Our aim is to make sure that people receiving care from the NHS are can obtain the best essential medicines in the world. And so we are examining this situation, and... looking to secure more funding into Britain."