Chancellor Rachel Reeves announced plans for targeted measures to address cost of living challenges in the upcoming Budget. In an interview with the BBC, Reeves emphasized the joint responsibility of the government and the Bank of England to tackle inflation. Currently, the UK is projected to have the highest inflation rate among G7 nations this year and next.
One proposed intervention includes reducing energy bills, potentially by lowering the existing 5% VAT on energy. The government is also considering the possibility of cutting some regulatory levies that contribute to energy costs. Draft reports from the Office for Budget Responsibility (OBR) are expected to provide insights into financial flexibility regarding these measures.
Financial analysts suggest Reeves may need to implement tax increases or introduce spending cuts to comply with her self-imposed borrowing limits. The Institute for Fiscal Studies recently identified a £22 billion financial gap that the chancellor must address. Reeves maintained her commitment to not raising income tax, VAT, or National Insurance rates, despite growing expenses.
Concerns regarding the UK’s economic relationship with China were also highlighted by Reeves. Following China’s announcement to impose tighter export controls on rare earths, she expressed her worries, arguing that such economic actions could negatively impact global markets. Reeves indicated her desire for a balanced approach, recognizing both the need to challenge China and the potential opportunities available in its markets.
The chancellor acknowledged that the price of medicines for the NHS could rise due to ongoing negotiations with the U.S. administration. She mentioned that several pharmaceutical companies have halted or abandoned projects in the UK, partly due to current pricing structures. Reeves emphasized the importance of ensuring that NHS patients have access to effective treatments and expressed a commitment to attract further investment in the country.
Source: https://www.bbc.com/news/articles/c8eykkgdze5o?at_medium=RSS&at_campaign=rss