Middle East war: Chancellor Rachel Reeves says UK now 'better placed' for price shocks as she delivers Spring Statement

The United Kingdom is in a “better place” to deal with soaring energy prices as a result of the conflict in the Middle East than it would have been under the last government, the Chancellor has claimed.

Rachel Reeves was responding to sharp increases in gas prices – up by more than 60%, and oil prices which are up by more than 10% across the country.

Chancellor of the Exchequer Rachel Reeves leaves 11 Downing Street, London, for the House of Commons to deliver her spring statement to MPs. Picture date: Tuesday March 3, 2026. PA Photo. Photo credit should read: Stefan Rousseau/PA Wire

placeholder image — Chancellor of the Exchequer Rachel Reeves leaves 11 Downing Street, London, for the House of Commons to deliver her spring statement to MPs. Picture date: Tuesday March 3, 2026. PA Photo. Photo credit should read: Stefan Rousseau/PA Wire

Fielding questions on the crisis after the Spring Statement, the Labour minister said recent actions by the government meant that “public finances are in a stronger place” to deal with events in Iran and the Middle East.

However, the Conservatives said the government’s biggest mistake was to “increase taxes by £66 billion” – the “equivalent of nearly £2,300 per household”. Sir Jeremy Hunt said if that money is needed for public services, £54 billion could be covered by reducing the welfare bill to 2019 levels.

During the Spring Statement, Rachel Reeves told MPs that Labour has “the right economic plan for our country” and has restored economic stability in an “uncertain” world. Setting out updated growth forecasts from the Office for Budget Responsibility (OBR), the chancellor said unemployment would peak at 5.3% this year and then fall gradually to 4.1% by 2030.

She said a 2% target on inflation is expected to be met later this year. However, the conflict in the Middle East has prompted a warning from David Miles, from the OBR’s budget responsibility committee, over its predictions on falling inflation. He warned that reaching target levels early this year have become “more uncertain” after jumps in oil and gas prices.

Announcing the Spring Forecast, the government said last year’s spending review had provided the UK’s devolved governments with their largest spending review settlements in real terms since devolution in 1998. It said as a result of decisions at spring forecast, the UK nations are receiving an additional £1.8 billion.

Locally, the NI Secretary has said that the Government’s decision to provide almost £390m in additional funding to the Executive over the Spending Review, including £231m in 2026-2027, is good news for Northern Ireland.

Hilary Benn said the Executive can use it to “deliver transformation of public services, fiscal stability and economic growth” – as he urged the multi-party coalition to agree to a multi-year budget “and take the necessary steps to deliver long-term budget sustainability.”

Asked if she would commit to shielding the public from global price shocks, Ms Reeves told the Commons: “Of course, the events unfolding in Iran and the Middle East have resulted over the last couple of days in gas prices going up by more than 60% and oil prices going up by more than 10%, which shows why the plan that we’ve had to take money off energy bills but also ensure our public finances are in a stronger place mean that we’re in a better place than we would have been 18 months ago after the mess left by the party opposite (the Conservatives).”

The government said the cost of living remains its number one focus – citing an uplift in the minimum wage.