🔗 Share this article

Treasury head Reeves has announced she is planning "focused measures to deal with cost of living pressures" in the upcoming Budget.

In comments to the BBC, she noted that reducing price rises is a joint responsibility of both the government and the central bank.

The UK's price growth is projected to be the most elevated among the Group of Seven industrialized countries this calendar year and next.

Potential Utility Bill Interventions

It is understood the administration could intervene to bring down utility costs, for example by slashing the current 5% level of value-added tax applied on energy.

A further approach is to lower some of the government charges presently added to bills.

Budgetary Limitations and Analyst Predictions

The administration will obtain the latest report from the official forecaster, the Office for Budget Responsibility, on Monday, which will show how much scope there is for such actions.

The expectation from the majority of analysts is that Reeves will have to introduce tax increases or spending cuts in order to adhere to her voluntary borrowing rules.

Previously on Thursday, calculations suggested there was a £22bn deficit for the chancellor to address, which is at the lower end of expectations.

"It is a collective job between the Bank of England and the government to bear down further on some of the sources of price increases," the Chancellor stated to reporters in the US capital, at the annual meetings of the IMF and global financial institution.

Tax Pledges and International Issues

While much of the attention has been on expected tax rises, the chancellor said the most recent information from the fiscal watchdog had not changed her pledge to manifesto promises not to raise rates on income tax, VAT or social security contributions.

She attributed an "uncertain global environment" with increasing international and trade tensions for the Budget revenue measures, probably to be directed on those "with the broadest shoulders."

International Trade Tensions

Addressing concerns about the UK's commercial links with China she said: "Our security interests invariably come first."

Last week's declaration by China to increase export controls on critical minerals and other resources that are essential for high-technology manufacturing led US President Donald Trump to propose an additional 100% import tax on goods from the Asian country, increasing the risk of an all-out trade war between the two economic giants.

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

Inquired about accepting the US offer to join its dispute with the Asian nation, Reeves said she was "deeply worried" by Chinese actions and urged the Beijing authorities "to avoid restrictions and limit trade."

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

"I believe there are sectors where we must address China, but there are also valuable chances to trade with Chinese markets, including banking sector and other sectors of the economic system. We've got to get that equilibrium appropriate."

The Treasury chief also stated she was working with G7 counterparts "on our own essential resources approach, so that we are reduced dependence."

NHS Drug Costs and Funding

The Chancellor also admitted that the price the National Health Service spends on drugs could increase as a result of current talks with the Trump administration and its drugs companies, in exchange for lower tariffs and funding.

A number of the biggest global pharmaceutical manufacturers have said in recent statements that they are either delaying or scrapping operations in the UK, with some attributing the low prices they are obtaining.

Recently, the Science Minister said the cost the NHS pays for medicines would need to increase to halt firms and pharmaceutical investment leaving the UK.

The Chancellor told the BBC: "We have seen because of the payment system, that medical research, recent pharmaceuticals have not been offered in the UK in the manner that they are in other European countries."

"Our aim is to make sure that people getting treatment from the NHS are can receive the top life-saving medicines in the world. And so we are reviewing all of that, and... seeking to attract more investment into Britain."