🔗 Share this article

Chancellor Reeves has announced she is preparing "specific measures to address household expense challenges" in the forthcoming financial statement.

During an interview with media outlets, she noted that curbing price rises is a shared task of both the government and the central bank.

The UK's inflation rate is projected to be the highest among the G7 developed nations this calendar year and next.

Possible Utility Cost Interventions

It is understood the government could intervene to lower energy bills, for instance by slashing the current 5% rate of value-added tax applied on energy supplies.

A further possibility is to lower some of the government charges currently included in household expenses.

Fiscal Limitations and Expert Predictions

The government will obtain the next draft from the independent fiscal watchdog, the OBR, on the start of the week, which will reveal how much scope there is for such actions.

The consensus from most economists is that Reeves will have to introduce tax rises or spending cuts in order to meet her self-imposed borrowing rules.

Previously on Thursday, calculations indicated there was a £22bn gap for the chancellor to fill, which is at the lower end of expectations.

"There's a joint responsibility between the Bank of England and the administration to bear down further on some of the sources of price increases," the Chancellor stated to reporters in Washington, at the conferences of the International Monetary Fund and World Bank.

Revenue Commitments and Global Concerns

While much of the focus has been on likely tax rises, the Treasury chief said the most recent data from the OBR had not changed her pledge to campaign commitments not to raise tax levels on income tax, VAT or National Insurance.

She blamed an "uncertain world" with growing geopolitical and trade issues for the Budget tax moves, probably to be targeted on those "most able to pay."

International Economic Tensions

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

Recent announcement by China to tighten export controls on critical minerals and other resources that are key for advanced tech manufacturing led US President Donald Trump to threaten an extra 100% tariff on imports from China, increasing the risk of an full-scale commercial conflict between the two global powers.

The American finance chief called China's decision "commercial pressure" and "a international production power grab."

Inquired about considering the US offer to participate in its battle with the Asian nation, Reeves said she was "deeply worried" by China's actions and encouraged the Beijing authorities "not to put up barriers and restrict access."

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

"In my view there are sectors where we need to confront China, but there are also significant opportunities to export to China's economy, including financial services and other areas of the economic system. We've got to achieve that balance right."

The Treasury chief also stated she was working with international partners "regarding our own essential resources plan, so that we are more independent."

NHS Drug Costs and Funding

The Chancellor also recognized that the cost the NHS spends on pharmaceuticals could increase as a consequence of ongoing talks with the US government and its drugs companies, in return for lower tariffs and funding.

A number of the biggest global drug companies have said in recent statements that they are either pausing or canceling projects in the United Kingdom, with some attributing the low prices they are receiving.

Recently, the Science Minister said the cost the NHS spends on medicines would must increase to halt firms and drug research funding departing from the United Kingdom.

Reeves stated to the BBC: "We have seen because of the payment system, that medical research, recent pharmaceuticals have not been offered in the United Kingdom in the extent that they are in other European countries."

"Our aim is to ensure that people receiving care from the NHS are able to obtain the finest essential drugs in the globe. And so we are examining all of that, and... seeking to obtain more investment into Britain."