Rachel Reeves hits out at Donald Trump Iran conflict ‘folly’ hitting UK households
In an interview with The Mirror, the Chancellor Rachel Reeves said she was ‘very frustrated and angry’ at America’s actions as families across Britain suffer the consequences
Rachel Reeves has hit out at Donald Trump’s US over the economic fallout of the Iran war – saying it was a “folly” to have no clear exit plan.
In an interview with The Mirror, the Chancellor said she was “very frustrated and angry” at America’s actions as families across Britain suffer the consequences. Gas prices have risen sharply due to the closure of the Strait of Hormuz, through which 20% of the world’s oil was transported before the decision of the US and Israel to attack Iran.
One prominent think-tank – the Resolution Foundation – has warned the average UK household could be £480 worse off over the current financial year than if the conflict had not happened. Ms Reeves said she did not recognise the figure – but insisted the government will keep a “close eye” on gas and electricity prices.
She told The Mirror: “This is a war that we did not start. It was a war that we did not want. I feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve.”
“And as a result the Strait of Hormuz is now blocked,” the Chancellor added. “We are hosting a conference this week with President Macron of France on how to secure passage through the Strait of Hormuz.
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“We’re not getting involved in the US blockade, we don’t think that is the right approach. All the way through this conflict we have said de-escalate, de-escalate. The Conservatives and Reform – they both wanted to jump in feet first into this conflict and for us to play a part in active, aggressive, offensive action.”
Pressed further on why she was frustrated at the US, she added: “Because of the impact it’s having on families and businesses in our country. When I presented the Spring Statement at the beginning of March, it showed that inflation was coming down, interest rates were projected to fall further after having been cut six times since I became Chancellor of the Exchequer.
“Borrowing and debt were falling and the economy was set to grow. It was already the fastest growing G7 economy in Europe last year, and that was projected to continue.”
Ms Reeves went on: “Obviously no sensible person is a supporter of the Iranian regime, but to start a conflict without being clear what the objectives are and not being clear about how you are going to get out of it, I do think that is a folly and it is one that is affecting families here in the UK but also families in the US and around the world.
“I don’t think it was the right decision. But it was absolutely the right decision for Keir Starmer – our Prime Minister – to keep us out of this conflict.”
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The Chancellor, who heads to the International Monetary Fund (IMF) meetings in Washington DC today, also highlighted that earlier this month the average family saw a decrease in the energy bills due to a fall of around £117 in the price cap.
She said this was locked in until the end of June – but there are concerns it could surge in the summer and autumn months when the next cap is set at the end of May. The government is hoping tensions in the Middle East will de-escalate but has made clear ministers will act to protect the most vulnerable households if necessary.
Ms Reeves has previously promised to step in and support those who need it most if energy bills spiral later this year due to the Middle East conflict. But she is not proposing universal support as unveiled by the 49-day PM Liz Truss in 2022 in response to Russia’s invasion of Ukraine.
Pointing to government interventions on energy prices, childcare and free breakfast clubs, she said: “There is plenty of universal support that we’re putting into the system. But what happened when Russia invaded Ukraine is that the Conservatives’ support package, more money went to the richest households than went to the poorest households.
“And as a result of that untargeted action, interest rates stayed higher for longer, inflation ended up higher than in most countries around the world, and we’re paying higher taxes today to repay some of that support that was given out in previous periods.
“The reason we are looking at how we can target support is that I don’t want people to end up paying more on their mortgages, more in taxes, more in the shop, because of an intervention now that then has to be paid back in the future.”
Ms Reeves also sidestepped whether there was the need for an emergency Budget despite the volatile situation. She told The Mirror: “The best way to get energy bills down is to de-escalate this conflict.
“Of course governments can take action to pay people’s energy bills, or cut taxes, but that’s only using taxpayers’ money to give them money and that money in the end has to be paid for in some way. The best way to ensure prices at the pump and our gas and electricity prices don’t go up, is to de-escalate this conflict.
“That’s why we didn’t get involved in the conflict in the first place and it’s why we are playing a global role, Keir Starmer is playing a global role in trying to re-open the Strait of Hormuz.”
