🔗 Share this article

Chancellor Rachel Reeves has revealed she is preparing "specific action to deal with cost of living challenges" in the upcoming Budget.

During an interview with media outlets, she emphasized that lowering price rises is a joint responsibility of both the government and the central bank.

The United Kingdom's price growth is expected to be the highest among the Group of Seven developed nations this calendar year and the following year.

Possible Energy Bill Measures

Reports indicate the government could take action to lower energy bills, such as by slashing the present 5% level of VAT charged on energy.

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

Budgetary Constraints and Analyst Predictions

The administration will obtain the latest draft from the independent fiscal watchdog, the OBR, on the start of the week, which will clarify how much room there is for such measures.

The expectation from the majority of experts is that the Chancellor will have to declare tax increases or spending cuts in order to meet her declared debt limits.

Previously on the same day, estimates showed there was a £22bn gap for the Treasury chief to resolve, which is at the more modest range of expectations.

"It is a collective job between the Bank of England and the government to further reduce some of the sources of inflation," Reeves informed the BBC in Washington, at the conferences of the IMF and World Bank.

Revenue Commitments and Global Concerns

While much of the focus has been on expected tax rises, the Treasury chief said the latest information from the fiscal watchdog had not changed her commitment to campaign commitments not to raise rates on income tax, VAT or National Insurance.

She blamed an "unpredictable world" with rising international and trade concerns for the fiscal tax moves, likely to be directed on those "with the broadest shoulders."

International Trade Disputes

Addressing apprehensions about the United Kingdom's trade ties with China she said: "The UK's security interests invariably are paramount."

Recent statement by Chinese authorities to tighten export controls on rare earths and other resources that are crucial for advanced tech production led US President the US President to threaten an extra 100% tariff on imports from the Asian country, raising the possibility of an full-scale commercial conflict between the two economic giants.

The US Treasury Secretary described China's decision "commercial pressure" and "a global supply chain control attempt."

Inquired about accepting the American proposal to participate in its battle with China, the Chancellor said she was "extremely troubled" by China's measures and urged the Chinese government "not to put up barriers and restrict access."

She said the move was "damaging for the world economy and causes additional headwinds."

"In my view there are fields where we must address Chinese policies, but there are also valuable prospects to sell into China's economy, including banking sector and other areas of the economy. We've got to get that equilibrium right."

The chancellor also stated she was collaborating with G7 counterparts "on our own essential resources strategy, so that we are more independent."

NHS Drug Costs and Funding

The Chancellor also acknowledged that the cost the NHS spends on drugs could go up as a result of current discussions with the Trump administration and its drugs companies, in exchange for lower tariffs and funding.

Some of the biggest global drug companies have said lately that they are either halting or scrapping investments in the UK, with some blaming the insufficient payments they are obtaining.

Last month, the Science Minister said the price the health service pays for medicines would must go up to halt businesses and drug research funding departing from the United Kingdom.

The Chancellor informed the BBC: "It has been observed because of the payment system, that medical research, new drugs have not been available in the United Kingdom in the manner that they are in other continental states."

"We want to make sure that individuals receiving care from the National Health Service are able to access the best life-saving treatments in the world. And so we are examining this situation, and... aiming to attract more funding into Britain."