🔗 Share this article

Treasury head Rachel Reeves has stated she is preparing "targeted action to address household expense challenges" in the forthcoming financial statement.

Speaking to the BBC, she emphasized that reducing price rises is a joint duty of both the government and the central bank.

The UK's price growth is forecast to be the highest among the Group of Seven developed nations this year and the following year.

Potential Utility Cost Interventions

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

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

Fiscal Limitations and Expert Predictions

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

The expectation from most experts is that the Chancellor will have to introduce tax increases or spending cuts in order to adhere to her self-imposed fiscal targets.

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

"There's a shared responsibility between the central bank and the administration to bear down further on some of the sources of inflation," the Chancellor told reporters in the US capital, at the conferences of the IMF and World Bank.

Revenue Pledges and International Issues

While much of the attention has been on likely tax increases, the chancellor said the latest data from the fiscal watchdog had not changed her vow to election pledges not to raise rates on income tax, sales tax or social security contributions.

She attributed an "unpredictable global environment" with increasing international and trade concerns for the fiscal tax moves, probably to be directed on those "wealthiest."

Global Economic Disputes

Referring to worries about the United Kingdom's commercial links with the Asian nation she said: "The UK's security interests invariably take priority."

Recent statement by China to tighten trade restrictions on rare earths and other materials that are essential for high-technology production led US President the US President to threaten an further 100% tariff on goods from China, raising the risk of an full-scale trade war between the two economic giants.

The US Treasury Secretary labeled the Chinese decision "economic coercion" and "a international production power grab."

Asked about considering the US offer to participate in its conflict with China, the Chancellor said she was "extremely troubled" by China's actions and urged the Chinese government "not to put up barriers and restrict access."

She said the decision was "damaging for the international commerce and generates further headwinds."

"I believe there are sectors where we need to challenge Chinese policies, but there are also valuable opportunities to export to Chinese markets, including banking sector and other areas of the economy. We've got to maintain that balance appropriate."

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

NHS Medicine Costs and Investment

Reeves also recognized that the price the NHS spends on drugs could go up as a consequence of ongoing talks with the Trump administration and its drugs companies, in return for lower tariffs and capital.

A number of the world's largest pharmaceutical manufacturers have said in recent statements that they are either pausing or abandoning projects in the United Kingdom, with some blaming the modest returns they are getting.

Recently, the Science Minister said the price the NHS spends on drugs would must increase to halt companies and drug research funding leaving the UK.

The Chancellor informed media: "It has been observed due to the pricing regime, that drug testing, innovative medicines have not been available in the UK in the way that they are in other continental states."

"The objective is to guarantee that individuals getting care from the NHS are can access the best essential treatments in the globe. And so we are examining this situation, and... looking to attract increased funding into Britain."