🔗 Share this article

Chancellor Reeves has revealed she is preparing "focused steps to deal with cost of living pressures" in next month's financial statement.

During an interview with the BBC, she noted that curbing price rises is a shared duty of both the administration and the Bank of England.

The UK's inflation rate is expected to be the highest among the G7 industrialized countries this calendar year and next.

Possible Energy Cost Interventions

It is understood the government could intervene to lower energy bills, for example by reducing the current 5% level of VAT charged on energy supplies.

A further possibility is to reduce some of the government charges currently added to bills.

Fiscal Constraints and Analyst Predictions

The administration will obtain the latest report from the official forecaster, the OBR, on the start of the week, which will clarify how much scope there is for such measures.

The consensus from the majority of experts is that Reeves will have to introduce higher taxes or expenditure reductions in order to adhere to her self-imposed fiscal targets.

Previously on Thursday, analysis suggested there was a £22 billion gap for the Treasury chief to resolve, which is at the lower end of projections.

"It is a collective task between the Bank of England and the government to further reduce some of the drivers of price increases," Reeves informed the BBC in Washington, at the conferences of the IMF and global financial institution.

Tax Pledges and Global Concerns

While a great deal of the attention has been on expected tax rises, the Treasury chief said the latest figures from the fiscal watchdog had not changed her vow to campaign commitments not to increase tax levels on income tax, sales tax or social security contributions.

She attributed an "uncertain world" with rising geopolitical and commercial issues for the fiscal revenue measures, probably to be directed on those "with the broadest shoulders."

Global Economic Disputes

Referring to concerns about the UK's trade ties with the Asian nation she said: "Our national security invariably are paramount."

Recent statement by Chinese authorities to increase trade restrictions on rare earths and other resources that are essential for high-technology production led US President the US President to propose an extra 100% tariff on imports from China, increasing the risk of an full-scale commercial conflict between the two global powers.

The US Treasury Secretary labeled China's action "economic coercion" and "a global supply chain power grab."

Questioned on considering the American proposal to participate in its battle with China, Reeves said she was "extremely troubled" by China's measures and encouraged the Chinese government "to avoid restrictions and limit trade."

She said the action was "harmful for the global economy and creates further headwinds."

"In my view there are areas where we need to challenge China, but there are also important opportunities to sell into Chinese markets, including financial services and other sectors of the economy. We've got to maintain that equilibrium right."

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

NHS Drug Pricing and Funding

Reeves also recognized that the cost the NHS spends on medicines could rise as a result of current talks with the Trump administration and its pharmaceutical firms, in return for lower tariffs and capital.

Some of the world's largest drug companies have said recently that they are either halting or abandoning investments in the UK, with several blaming the low prices they are receiving.

Recently, the Science Minister said the price the NHS pays for medicines would must increase to halt companies and pharmaceutical investment departing from the United Kingdom.

Reeves stated to the BBC: "We have seen due to the cost structure, that drug testing, new drugs have not been available in the UK in the manner that they are in other continental states."

"We want to ensure that people getting care from the NHS are able to access the top essential medicines in the world. And so we are reviewing these issues, and... aiming to obtain increased funding into the UK."