Rachel Reeves said the UK economy was in a stronger position to face the turmoil triggered by war in the Middle East as experts warned prolonged conflict could hit household finances
Rachel Reeves has insisted Britain’s economy can “weather” the impact of the Iran conflict as fears mount over the impact on family finances.
The Chancellor’s Spring Statement on Tuesday was overshadowed by war raging in the Middle East as experts warned the conflict could upend her economic plans. But today, Ms Reeves said she had stabilised the public finances after the mess left by the Tories and the UK was in a stronger position to face the turbulence as borrowing costs have fallen.
“What is unfolding in the Middle East shows how important it is to have returned stability to the economy,” she told the Mirror on a visit to a building society in Stevenage. “I’m confident that we can weather whatever is thrown at us.
“We are a strong economy. We have security, stability, built back into our economy. But of course, as ever since I became Chancellor, my number one priority is to make working people better off by growing our economy. Whatever is thrown at us, that will continue to be my objective.”
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Ms Reeves held talks on soaring oil and gas prices today in Downing Street with firms including BP, TotalEnergies and Serica. A Government source said she pledged to work with them to navigate the uncertainty triggered by the Iran crisis and to work to end the windfall tax on North Sea oil and gas.
It comes as experts warned the shock could clobber families. The Resolution Foundation think tank said households could face a £500 hike to annual bills if the conflict drags on. And the National Institute of Economic and Social Research (Niesr) warned that if rising energy costs persisted for a year it could drive up interest rates above 4%.
Asked how she could shield people from bill hikes, Ms Reeves urged voters to “judge me on record”, pointing to action she’s taken to reduce energy bills, and other cost of living measures like a freeze on rail fares and prescription charges.
She added: “Even with the difficult public finances I inherited, we managed to take money off people’s bills. We are getting those interest rates down. So judge me on my record. I am determined to tackle the cost of living challenges that families have been facing these last few years, and that remains the case of whatever is thrown at us.”
She rebuffed Donald Trump‘s criticism of Keir Starmer for refusing to join the initial wave of strikes against Iran, after the US President said the PM was “no Winston Churchill” in an Oval Office rant.
Ms Reeves said: “It’s really important that we do the right thing, and we didn’t judge it was the right thing to take offensive action in the Middle East.
“But with our assets, with our personnel, with our military, with our citizens affected now in the Middle East because of the Iranian response, it is important that we’ve made available our air bases, both in Diego Garcia, but also in in the UK, for the US to launch that defensive action against Iranian targets. That is the right balance.
“We are supporting the US in that defensive action, but I think it’s really, really important that we de-escalate what is happening in the Middle East, because that is in our national interest. We will always act as a government in our national interest.”
The Chancellor spoke to the Mirror after meeting first-time buyers at a Nationwide Building Society, in Stevenage, where she spoke of her push to get young people to believe they can own their own homes.
She said: “Over the last few years, when houses weren’t being built, when interest rates went through the roof, when inflation got out of control, for lots of young people, it wasn’t possible to get on the housing ladder.
“But the stability that we’ve returned to the economy, inflation coming down, interest rates having been cut six times already means that young people now can think again about getting on the housing ladder.”
She added: “I also recognise that there are many young people and families living in private rented accommodation, and so this isn’t a government that just cares about home ownership.
“We also are very mindful of people in the private rented sector, and that’s why our Renters Rights Act, which is now in force, gives greater rights to people in the private rented sector.”
Ms Reeves is expected to set out reforms in the coming weeks to help young people in the job market, as the government grapples with the numbers of young people who aren’t in education, employment or training (Neet).
Some 957,000 people aged 16 to 24 in the UK were Neet in October to December 2025 – 12.8% of that age group.
Plans to pay young people the same minimum wage as older workers look set to be delayed amid concerns about unemployment among 18 to 24-year-olds, which hit a five-year high in the final three months of 2025.
Ms Reeves said: “This is a real challenge. And I guess the difference between the previous government and this government is that both of us faced a challenge. We’re trying to do something about it.”