Rachel Reeves warns Iran conflict 'likely to put upward pressure on inflation'
Rachel Reeves has told MPs the conflict with Iran is “likely to put upward pressure on inflation” after the price of oil surged.
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The Chancellor also told the Commons she stands ready “to support a co-ordinated release” of international oil reserves to ease the economic shock of the crisis.
Oil prices have soared above 100 dollars a barrel for the first time since 2022 in response to the crisis.London’s FTSE 100 Index fell nearly 2% soon after opening as the Middle East conflict caused an acute supply crunch.
“I am clear eyed about my response to the current situation. My economic approach will both be responsive to a changing world and responsible in the national interest,“ Ms Reeves told the Commons on Monday.
She added: "The economic impact of the situation in the Middle East will depend, of course, on its severity and its duration. The movements that we have already seen are likely to put upward pressure on inflation in the coming months.”
However, the Chancellor wanted to ensure the country that "the fundamentals of Britain’s economy are strong."
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She said: "Every step that I have taken since the election has built our national resilience.
“Stability in the public finances, investment in infrastructure in both defence and energy security, and reform to our economy.”
It comes hours after Sir Keir Starmer warned that longer the war in the Middle East continues, the more likely it is there will be economic damage in the UK.
But the Prime Minister also insisted the economy was resilient and well placed to absorb the “likely impact” on households and businesses.
He acknowledged people’s concerns about the threat of rising bills in the wake of the US-Israeli assault on Iran and Tehran’s reprisals against countries across the region.
At a community centre in London, Sir Keir said: “People will sense, you will sense I think, that the longer this goes on, the more likely the potential for an impact on our economy, impact into the lives and households of everybody and every business.
“And our job is to get ahead of that, to look around the corner, assess the risk, monitor the risks, and work with others in relation to that.”