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Treasury head Rachel Reeves has revealed she is preparing "focused action to deal with cost of living challenges" in the forthcoming Budget.

During an interview with the BBC, she stated that lowering inflation is a shared responsibility of both the government and the Bank of England.

The United Kingdom's inflation rate is projected to be the most elevated among the Group of Seven industrialized countries this calendar year and next.

Possible Utility Bill Interventions

Sources suggest the government could take action to reduce energy bills, for instance by reducing the current 5% rate of VAT applied on energy supplies.

Another possibility is to lower some of the regulatory levies presently included in bills.

Fiscal Limitations and Expert Expectations

The administration will obtain the next assessment from the independent fiscal watchdog, the OBR, on the start of the week, which will reveal how much scope there is for such actions.

The view from most experts is that Reeves will have to declare higher taxes or spending cuts in order to meet her declared fiscal targets.

Earlier on Thursday, estimates showed there was a £22 billion deficit for the Treasury chief to address, which is at the lower end of expectations.

"There's a shared job between the central bank and the government to continue tackling some of the causes of price increases," Reeves stated to reporters in the US capital, at the yearly gatherings of the International Monetary Fund and World Bank.

Tax Pledges and Global Issues

While much of the focus has been on probable tax increases, the Treasury chief said the most recent data from the OBR had not changed her commitment to manifesto promises not to raise rates on income tax, sales tax or National Insurance.

She blamed an "unpredictable global environment" with growing international and trade tensions for the Budget revenue measures, likely to be focused on those "with the broadest shoulders."

International Economic Tensions

Commenting on worries about the United Kingdom's economic relations with China she said: "The UK's security interests invariably are paramount."

Recent announcement by China to strengthen trade restrictions on critical minerals and other materials that are crucial for high-technology production led American leader the US President to suggest an further 100% tariff on goods from China, raising the prospect of an full-scale trade war between the two economic giants.

The American finance chief described the Chinese action "commercial pressure" and "a international production power grab."

Asked about accepting the American proposal to join its dispute with China, the Chancellor said she was "extremely troubled" by China's measures and called on the Beijing authorities "to avoid restrictions and limit trade."

She said the move was "bad for the international commerce and creates additional headwinds."

"I believe there are sectors where we need to confront Chinese policies, but there are also significant prospects to sell into Chinese markets, including banking sector and other areas of the economy. We've got to maintain that equilibrium appropriate."

The Treasury chief also confirmed she was collaborating with international partners "regarding our own critical minerals strategy, so that we are less reliant."

NHS Medicine Pricing and Funding

Reeves also admitted that the price the National Health Service pays for pharmaceuticals could rise as a consequence of ongoing negotiations with the Trump administration and its drugs companies, in exchange for lower tariffs and funding.

A number of the world's largest pharmaceutical manufacturers have said in recent statements that they are either halting or scrapping projects in the United Kingdom, with some blaming the insufficient payments they are getting.

Recently, the government science advisor said the cost the health service pays for drugs would need to go up to halt firms and pharmaceutical investment departing from the United Kingdom.

Reeves stated to the BBC: "It has been observed because of the cost structure, that drug testing, recent pharmaceuticals have not been provided in the United Kingdom in the way that they are in other European countries."

"We want to guarantee that individuals receiving care from the NHS are able to access the top essential treatments in the world. And so we are examining this situation, and... looking to attract additional investment into Britain."