UK Chancellor Rachel Reeves this week delivered her Spring Statement. Apart from “steady as she goes” platitudes and left-wing clap lines, she had little to say.
But what was astonishing is that Reeves seemed largely to ignore the economic and financial impact of turmoil in the Middle East.
This US-Iran conflict isn’t a flash in the pan. With Israel involved, and other Gulf powers being drawn in, we’re in for military chaos – and thwarted energy supplies – for weeks, possibly months to come. That will seriously impact Britain – a hugely vulnerable net energy importer.
On Tuesday, Reeves said the OBR budget watchdog has cut the UK’s 2026 growth forecast from 1.4 to 1.1pc. But that downgrade doesn’t include the impact of the 15pc spike in global oil prices since US airstrikes last weekend and a doubling of the price of UK wholesale gas.
Reeves continues to claim - laughably – that the UK is a “beacon on stability”. In reality, rising energy costs will push up inflation – with creditors then demanding higher returns to lend to a severely cash-strapped British government.
Already, the UK government is spending upward of £100 billion a year on debt interest, more than we spend on schools, double the defence budget – with Britain paying more to borrow than any G7 nation, more than Morocco and Greece.
But with energy and global supply chains under threat, the coming inflation spike is pushing up UK borrowing costs even more.
Since Monday, the rate at which the government borrows long-term money has already surged 30 basis points, with yet more borrowing needed to pay those higher interest bills.
And as long as Iran continues to block the Strait of Hormuz, that vital energy pinchpoint, blocking Saudi oil and Qatari LNG gas from global markets, energy prices will keep rising.
To discuss all this, Shadow Chancellor Rt Hon Mel Stride MP joins Liam Halligan in the When The Facts Change Studio – a no-holds barred discussion, with one of the UK’s top Conservative politicians, on When The Facts Change.
Key Topics
+ Impact of Middle East conflict on energy prices
+ UK fiscal policy and government spending
+ Vulnerability of UK sovereign debt market
+ Civil service efficiency and reform
