Rachel Reeves plans ‘targeted action’ on bills in Budget

Chancellor Rachel Reeves said she planned “targeted action to tackle cost of living challenges” in next month’s Budget.

Speaking to the BBC, he said that it was the duty of both the government and the Bank of England to reduce inflation.

It is estimated that the UK’s inflation rate will be the highest among the G7 group of developed countries this year and next year.

The BBC understands that the government could intervene to reduce energy bills, for example by reducing the current 5% VAT rate on energy.

Another option is to reduce some of the regulatory taxes currently added to bills.

The government will receive the next draft from official forecaster the Office for Budget Responsibility (OBR) on Monday, which will set out how much room there is for such a measure.

Most analysts expect Reeves will have to announce tax increases or spending cuts to comply with his self-imposed borrowing rules

In the early hours of Thursday, The Institute for Fiscal Studies has calculated a £22bn gap It’s a figure the Chancellor has to fill, which is below expectations.

“There is joint work between the Bank of England and the government to look at some of the causes of inflation in more detail,” Reeves told the BBC at the annual meetings of the International Monetary Fund and World Bank in Washington.

While much of the focus has been on possible tax rises, the chancellor said the latest information from the OBR did not change his commitment to his manifesto promises not to increase income tax, VAT or National Insurance rates.

He blamed an “uncertain world” with rising geopolitical and trade concerns for the Budget tax moves, which are likely to focus on “the broadest shoulders”.

The Chancellor also announced a new support scheme to help financial firms enable them to invest in the UK.

The government has said the so-called “concierge” facility, called the Investment Office: Financial Services, will guide companies on regulations and make it easier for them to do business in Britain by helping them choose the best locations to set up.

According to the Treasury, around 1.2 million people across the UK work in the financial services sector, with more than half of these jobs located outside London.

Reeves, who is in Washington DC for the annual meeting of the International Monetary Fund (IMF), said: “This service will drive investment across the UK, give the world’s most innovative businesses access to talent in every corner of our country, and make working people feel better.”

IMF is an international organization with 190 member countries. They work together to maintain global economic stability.

Ms Reeves also touched on concerns at the IMF about Britain’s economic relations with China, saying “our national security always comes first”.

Last week’s announcement China to tighten export controls on rare earth elements and other materials that are key to high-tech production, under the leadership of US President Donald Trump. Threatening 100% additional tariffs The increase in imports from China raises the possibility of an all-out trade war between the two economic giants.

US Treasury Secretary Scott Bessent He called China’s move “economic pressure” and a “power grab in the global supply chain.”

When asked about accepting the United States’ offer to join him in its war with China, Reeves said he was “very concerned” about China’s actions and called on the Chinese government “not to put up barriers and not to restrict access.”

He said the move was “bad for the global economy and creates more negativity.”

“I believe there are areas where we need to challenge China, but there are also significant opportunities to sell into Chinese markets, including financial services and other areas of the economy. We have to get that balance right.”

The Chancellor also confirmed that he was working with G7 counterparts “on our own critical minerals strategy, so that we are less dependent”.

Reeves also acknowledged that the price the NHS pays for drugs could rise as a result of ongoing negotiations with the Trump administration and pharmaceutical companies in exchange for lower tariffs and investment.

Some of the world’s largest pharmaceutical companies recently said: Pausing or scrapping projects in the UKSome blame the low prices they receive.

Last month, Science Minister Patrick Vallance said: The price the NHS pays for medicines will need to rise to stop companies and pharmaceutical investments leaving the UK.

Reeves told the BBC: “Due to the pricing regime, we have seen that clinical trials, new medicines, are not offered in the UK in the same way they are in other European countries.

“We want to make sure that people receiving treatment from the NHS have access to the best life-saving medicines in the world. So we’re looking at all that and… aiming to secure more investment in Britain.”

Additional reporting by Pritti Mistry.