🔗 Share this article

Chancellor Rachel Reeves has stated she is planning "targeted action to deal with cost of living issues" in the upcoming financial statement.

In comments to media outlets, she noted that lowering price rises is a shared duty of both the government and the Bank of England.

The UK's inflation rate is projected to be the most elevated among the G7 industrialized countries this year and the following year.

Potential Utility Bill Measures

Reports indicate the administration could intervene to bring down utility costs, for instance by cutting the present 5% rate of VAT charged on energy.

An additional approach is to reduce some of the policy costs currently included in bills.

Fiscal Limitations and Expert Predictions

The government will obtain the latest assessment from the official forecaster, the OBR, on Monday, which will show how much space there is for these measures.

The expectation from the majority of experts is that Reeves will have to announce tax rises or spending cuts in order to meet her self-imposed fiscal targets.

Previously on the same day, calculations showed there was a £22 billion shortfall for the Treasury chief to address, which is at the more modest range of projections.

"There's a joint responsibility between the central bank and the administration to bear down further on some of the sources of price increases," Reeves informed reporters in the US capital, at the conferences of the International Monetary Fund and World Bank.

Tax Commitments and International Issues

While a great deal of the focus has been on probable tax increases, the Treasury chief said the most recent data from the OBR had not changed her commitment to election pledges not to increase tax levels on earnings tax, sales tax or social security contributions.

She blamed an "unpredictable global environment" with increasing geopolitical and commercial tensions for the fiscal tax moves, likely to be directed on those "most able to pay."

Global Trade Tensions

Addressing worries about the United Kingdom's economic relations with China she said: "Our security interests always are paramount."

Last week's announcement by Chinese authorities to strengthen trade restrictions on critical minerals and other resources that are crucial for high-technology production led American leader Donald Trump to suggest an extra 100% tariff on goods from China, increasing the prospect of an full-scale commercial conflict between the two largest economies.

The US Treasury Secretary called the Chinese action "economic coercion" and "a global supply chain power grab."

Asked about considering the US offer to join its dispute with China, Reeves said she was "very concerned" by Chinese actions and urged the Beijing authorities "to avoid restrictions and limit trade."

She said the action was "damaging for the world economy and generates further headwinds."

"In my view there are fields where we need to confront Chinese policies, but there are also valuable chances to sell into China's economy, including financial services and other sectors of the economy. We've got to maintain that equilibrium correct."

The Treasury chief also stated she was cooperating with other major economies "on our own essential resources approach, so that we are more independent."

Health Service Medicine Costs and Funding

Reeves also admitted that the price the NHS pays for medicines could rise as a consequence of ongoing discussions with the Trump administration and its drugs companies, in exchange for reduced taxes and funding.

Some of the biggest global pharmaceutical manufacturers have said lately that they are either delaying or abandoning operations in the UK, with several blaming the insufficient payments they are obtaining.

Last month, the Science Minister said the price the NHS pays for drugs would must increase to halt businesses and drug research funding departing from the UK.

Reeves told the BBC: "It has been observed due to the pricing regime, that medical research, new drugs have not been available in the UK in the way that they are in other European countries."

"We want to guarantee that individuals receiving treatment from the NHS are can obtain the finest essential treatments in the globe. And so we are reviewing these issues, and... seeking to obtain more funding into Britain."