Good morning and welcome to our live coverage of UK politics. The chancellor, Rachel Reeves, and the prime minister, Keir Starmer, indicated yesterday that the government could be prepared to intervene to protect UK households against major cost-of-living shocks to come at the next energy price cap, as Brent crude, the international benchmark, surged as high as $119.50 a barrel on Monday.
Brent then slid back to about $91 when Donald Trump described the US-Israeli war on Iran as “very complete, pretty much” in an interview with CBS News yesterday evening.
His contradictory statements on the timeline for the duration of the war have added to market turbulence, with fears of a prolonged conflict causing governments to consider support packages to protect people from higher prices caused by a predicted surge in inflation.
The British Chambers of Commerce forecast that inflation would remain “firmly above” the Bank of England’s 2% target, noting the “highly uncertain” global situation.
View image in fullscreenRachel Reeves said Britain is likely to be hit by rising inflation because of the US war with Iran. Photograph: Simon Dawson/No 10 Downing StreetFollowing a call with her G7 counterparts on Monday, Reeves said she was ready to support “a coordinated release” of international oil reserves to ease the economic shock of the escalating crisis.
She also called for action to “guarantee the security of vessels” passing through the strait of Hormuz, one of the world’s most important shipping routes. The war has severely reduced sea traffic through the strait which carries about one-fifth of global seaborne crude oil.
Starmer said a prolonged conflict would affect the “lives and households of everybody” but vowed that ministers would seek to “get ahead” in case of that event.
Reeves is due in the Commons for Treasury questions at 11.30am as she faces calls to ditch a planned 5p rise in fuel duty in September and set out an emergency package to shield households from global energy price rises and inflationary pressures.
