🔗 Share this article

Treasury head Rachel Reeves has revealed she is planning "specific measures to tackle household expense challenges" in the forthcoming financial statement.

During an interview with the BBC, she noted that lowering price rises is a joint duty of both the government and the Bank of England.

The United Kingdom's inflation rate is forecast to be the most elevated among the G7 advanced economies this year and the following year.

Possible Utility Bill Measures

It is understood the government could take action to reduce utility costs, such as by reducing the current 5% rate of VAT applied on energy.

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

Fiscal Limitations and Analyst Expectations

The government will receive the next report from the official forecaster, the OBR, on Monday, which will clarify how much scope there is for such measures.

The expectation from most analysts is that the Chancellor will have to introduce tax rises or budget cuts in order to adhere to her voluntary fiscal targets.

Earlier on the same day, analysis showed there was a £22 billion shortfall for the chancellor to fill, which is at the more modest range of projections.

"There's a joint task between the Bank of England and the administration to continue tackling some of the drivers of inflation," the Chancellor informed the BBC in the US capital, at the yearly gatherings of the International Monetary Fund and World Bank.

Tax Commitments and Global Concerns

While much of the focus has been on probable tax rises, the chancellor said the latest information from the fiscal watchdog had not altered her commitment to manifesto promises not to raise rates on income tax, VAT or social security contributions.

She attributed an "unpredictable world" with growing international and trade tensions for the fiscal tax moves, probably to be directed on those "most able to pay."

Global Economic Tensions

Addressing worries about the United Kingdom's economic relations with China she said: "The UK's security interests invariably take priority."

Last week's statement by Chinese authorities to increase trade restrictions on critical minerals and other materials that are crucial for advanced tech manufacturing led US President the US President to suggest an extra 100% tariff on goods from China, raising the prospect of an full-scale trade war between the two largest economies.

The American finance chief labeled China's decision "economic coercion" and "a global supply chain control attempt."

Inquired about accepting the US offer to join its battle with China, the Chancellor said she was "extremely troubled" by Chinese actions and called on the Chinese government "not to put up barriers and restrict access."

She said the decision was "bad for the international commerce and causes further obstacles."

"I believe there are areas where we must challenge China, but there are also significant chances to export to China's economy, including banking sector and other areas of the economic system. We've got to get that balance appropriate."

The chancellor also stated she was collaborating with other major economies "regarding our own essential resources approach, so that we are less reliant."

Health Service Drug Costs and Investment

The Chancellor also recognized that the price the NHS pays for medicines could rise as a result of ongoing negotiations with the Trump administration and its drugs companies, in exchange for reduced taxes and funding.

A number of the biggest global pharmaceutical manufacturers have said in recent statements that they are either delaying or canceling operations in the United Kingdom, with several blaming the low prices they are getting.

Last month, the Science Minister said the price the health service pays for medicines would have to increase to prevent companies and pharmaceutical investment leaving the UK.

The Chancellor informed media: "It has been observed as a result of the pricing regime, that medical research, recent pharmaceuticals have not been offered in the UK in the way that they are in other EU nations."

"The objective is to guarantee that people getting care from the NHS are able to receive the top life-saving medicines in the globe. And so we are looking at these issues, and... aiming to attract more investment into the UK."