🔗 Share this article

Chancellor Reeves has revealed she is planning "focused steps to tackle cost of living pressures" in the forthcoming financial statement.

In comments to the BBC, she stated that reducing price rises is a joint duty of both the administration and the Bank of England.

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

Potential Energy Cost Interventions

It is understood the administration could take action to reduce utility costs, for example by slashing the current 5% level of VAT applied on energy.

A further option is to reduce some of the government charges currently included in bills.

Fiscal Limitations and Analyst Expectations

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

The consensus from most experts is that the Chancellor will have to introduce tax rises or spending cuts in order to meet her voluntary fiscal targets.

Previously on Thursday, calculations showed there was a £22bn deficit for the chancellor to fill, which is at the more modest range of forecasts.

"It is a shared responsibility between the Bank of England and the government to further reduce some of the causes of inflation," Reeves told the BBC in the US capital, at the yearly gatherings of the IMF and World Bank.

Revenue Commitments and Global Issues

While a great deal of the focus has been on likely tax increases, the Treasury chief said the latest information from the OBR had not altered her pledge to campaign commitments not to raise rates on earnings tax, sales tax or National Insurance.

She attributed an "uncertain world" with rising geopolitical and trade concerns for the fiscal tax moves, probably to be targeted on those "most able to pay."

International Economic Tensions

Commenting on concerns about the United Kingdom's commercial links with China she said: "The UK's security interests invariably come first."

Last week's announcement by China to increase trade restrictions on rare earths and other resources that are essential for advanced tech manufacturing led US President the US President to threaten an further 100% tariff on imports from China, increasing the prospect of an full-scale commercial conflict between the two largest economies.

The US Treasury Secretary labeled the Chinese action "economic coercion" and "a international production control attempt."

Asked about accepting the US offer to participate in its dispute with China, Reeves said she was "very concerned" by Chinese measures and called on the Beijing authorities "to avoid restrictions and restrict access."

She said the decision was "harmful for the international commerce and generates further challenges."

"In my view there are sectors where we should challenge China, but there are also significant opportunities to trade with Chinese markets, including financial services and other areas of the economic system. We've got to achieve that equilibrium correct."

The Treasury chief also stated she was cooperating with G7 counterparts "regarding our own essential resources strategy, so that we are reduced dependence."

Health Service Drug Costs and Investment

The Chancellor also admitted that the cost the National Health Service spends on drugs could rise as a result of ongoing negotiations with the US government and its pharmaceutical firms, in return for lower tariffs and capital.

A number of the world's largest drug companies have said lately that they are either halting or canceling operations in the United Kingdom, with several blaming the modest returns they are receiving.

Last month, the Science Minister said the cost the NHS pays for drugs would must increase to halt companies and pharmaceutical investment departing from the UK.

The Chancellor told the BBC: "We have seen due to the payment system, that medical research, innovative medicines have not been offered in the UK in the manner that they are in other EU nations."

"Our aim is to make sure that individuals receiving care from the National Health Service are can receive the finest essential treatments in the globe. And so we are looking at these issues, and... aiming to obtain increased funding into Britain."