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(Bloomberg) — Chancellor of the Exchequer Rachel Reeves said it was too soon to assess the economic impacts on the UK caused by the Iran war, as she appeared to rule out immediate help for households and businesses.
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Speaking to Parliament’s Treasury Select Committee on Wednesday, Britain’s finance minister said the country is in a stronger position now to respond to the crisis compared to when Russia invaded Ukraine in 2022. She added that the government is “looking at a number of scenarios and monitoring very carefully this situation.”
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The US and Israel’s ongoing war with Iran has caused energy prices to spike and raised questions about whether Reeves will seek to intervene to help people with their energy bills. Bloomberg Economics estimates that headline inflation could end 2026 at around 3%, and traders have ramped up bets on interest rate hikes by the Bank of England.
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“It is too soon to be able to tell what the impact of this is,” Reeves told the panel. “At this stage, I think it would be unwise to speculate on what the impact on inflation, growth or interest rates would be.”
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The chancellor said that she’d met with the chair of Lloyd’s of London, Charles Roxburgh, to discuss maritime insurance to facilitate the continued passage of ships through the Strait of Hormuz, and that the UK is willing to play its part in using its oil reserves to help reduce the price of oil.
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For households, she pointed that under the UK’s price cap, the average cost of energy bills will go down by £117 ($157) a year on April 1, and remain at that level until the end of June, at which point a new price cap set by the energy regulator Ofgem will come in.
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“We are much too early, less than two weeks into the conflict, to have any certainty about what things would look like when the next energy price cap is determined at the end of May for July,” Reeves said. She also said “nothing is off the table” when it comes to helping businesses, which aren’t protected by the price cap, but reiterated again that it’s too early to make a call.
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