🔗 Share this article

Chancellor Reeves has announced she is planning "targeted measures to address cost of living challenges" in next month's financial statement.

In comments to the BBC, she emphasized that reducing inflation is a joint duty of both the government and the central bank.

The UK's price growth is expected to be the highest among the G7 advanced economies this calendar year and the following year.

Possible Energy Bill Measures

Sources suggest the administration could take action to lower energy bills, for example by slashing the present 5% rate of VAT applied on energy supplies.

An additional possibility is to reduce some of the policy costs presently added to household expenses.

Fiscal Constraints and Expert Expectations

The government will receive the next draft from the official forecaster, the OBR, on the start of the week, which will reveal how much scope there is for such actions.

The view from most economists is that the Chancellor will have to introduce higher taxes or expenditure reductions in order to meet her voluntary debt limits.

Earlier on the same day, analysis suggested there was a twenty-two billion pound gap for the chancellor to address, which is at the lower end of expectations.

"There's a joint task between the central bank and the administration to continue tackling some of the sources of price increases," the Chancellor informed the BBC in the US capital, at the annual meetings of the International Monetary Fund and World Bank.

Tax Pledges and International Issues

While much of the attention has been on likely tax increases, the chancellor said the most recent figures from the OBR had not changed her commitment to manifesto promises not to increase tax levels on income tax, VAT or National Insurance.

She attributed an "uncertain global environment" with rising international and commercial tensions for the fiscal tax moves, probably to be targeted on those "most able to pay."

Global Economic Tensions

Commenting on concerns about the United Kingdom's commercial links with the Asian nation she said: "Our national security invariably are paramount."

Last week's announcement by Chinese authorities to strengthen trade restrictions on critical minerals and other resources that are key for high-technology manufacturing led American leader the US President to threaten an further 100% tariff on goods from China, raising the possibility of an full-scale trade war between the two economic giants.

The US Treasury Secretary labeled the Chinese move "economic coercion" and "a global supply chain control attempt."

Asked about accepting the American proposal to participate in its conflict with the Asian nation, Reeves said she was "extremely troubled" by China's actions and urged the Chinese government "to avoid restrictions and limit trade."

She said the decision was "damaging for the world economy and generates further challenges."

"In my view there are areas where we must address Chinese policies, but there are also valuable opportunities to trade with China's economy, including banking sector and other sectors of the economic system. We've got to get that balance appropriate."

The chancellor also confirmed she was collaborating with international partners "on our own critical minerals plan, so that we are more independent."

Health Service Medicine Pricing and Investment

Reeves also acknowledged that the price the NHS spends on medicines could rise as a consequence of current negotiations with the US government and its drugs companies, in return for reduced taxes and capital.

Some of the world's largest drug companies have said recently that they are either halting or canceling investments in the UK, with several blaming the modest returns they are getting.

Last month, the Science Minister said the price the health service pays for drugs would have to rise to stop businesses and pharmaceutical investment departing from the UK.

The Chancellor told media: "We have seen due to the pricing regime, that clinical trials, recent pharmaceuticals have not been available in the United Kingdom in the extent that they are in other European countries."

"We want to make sure that people getting care from the NHS are can receive the best life-saving drugs in the globe. And so we are reviewing these issues, and... aiming to secure additional investment into the UK."