Prime Minister speaks as oil prices soar above $100 a barrel
An explosion erupts following strikes near Azadi Tower close to Mehrabad International Airport in Tehran on March 7 (Image: AFP via Getty Images)
The longer the conflict in the Middle East persists, the greater the risk of economic damage to the UK, Sir Keir Starmer has warned.The Prime Minister maintained that the economy was robust and well-equipped to handle the “likely impact” on households and businesses, but recognised concerns over the potential for rising bills following the US-Israeli attack on Iran and Tehran’s retaliatory actions against nations throughout the region.
Oil prices have rocketed above 100 dollars a barrel for the first time since 2022 due to the crisis. London’s FTSE 100 Index experienced a nearly 2% drop shortly after trading commenced as the Middle East conflict triggered a severe supply shortage.
Speaking at a community centre in London, Sir Keir said: “People will sense, you will sense I think, that the longer this goes on, the more likely the potential for an impact on our economy, impact into the lives and households of everybody and every business.
“And our job is to get ahead of that, to look around the corner, assess the risk, monitor the risks, and work with others in relation to that.”
US President Donald Trump attempted to minimise the repercussions of the chaos, asserting that prices will “drop rapidly when the destruction of the Iran nuclear threat is over” and were a “very small price to pay”.
“ONLY FOOLS WOULD THINK DIFFERENTLY,” he declared in a post on his Truth Social platform.
Following the death of Iran’s supreme leader in an Israeli strike at the conflict’s outset, his son Mojtaba Khamenei was appointed as his successor on Sunday, a decision likely to provoke Mr Trump’s anger, having previously declared him an “unacceptable” choice.
Most British households will be shielded from the impact of rising energy prices in the near-term by the energy price cap.
However, increasing oil prices will translate into higher costs at forecourts.
And the threat of elevated energy costs driving up inflation means the Bank of England is now unlikely to reduce interest rates this month, as had previously been anticipated.
Finance ministers from the G7 group of leading democracies, including Chancellor Rachel Reeves, will convene virtually on Monday to address the crisis.
The Financial Times reported that ministers will consider a possible coordinated release of petroleum from reserves organised by the International Energy Agency in an effort to minimise the economic shock.
Sir Keir stated there was “more resilience” in the UK economy and the public finances than there had been during the energy price shock triggered by the Ukraine invasion in 2022.
Sir Keir said: “I do understand the anxiety now, at nine days into this conflict, where a number of people will be saying ‘well, now is the situation going to get worse, and how’s it going to impact me and my family?’”.
“At the moment, what we’re doing is monitoring the risk, working with others to mitigate the risk.
“The Chancellor is talking to the Bank of England every day to make sure that we’re ahead of that.”
He stated the energy cap would shield households from the impact of turbulence in the markets “but of course, businesses and others will be concerned to watch carefully what’s going on”.
Asked whether Mr Trump was risking a world war with his actions, Sir Keir said: “We do need to find a way to de-escalate the situation and that’s what a lot of our discussions are about – how do we find a way to de-escalate this situation and make sure it doesn’t escalate even further than it already has.”
Sir Keir spoke to Mr Trump over the weekend regarding the countries’ military co-operation in the region, in what appeared to be a positive signal a day after the US president lashed out at him in a social media post and suggested the UK’s assistance was too late.
Mr Trump has repeatedly criticised Sir Keir’s decision not to authorise permission for the initial wave of military action against Iran.
The Prime Minister subsequently granted permission for “defensive” US action against Iranian missile sites from RAF Fairford in Gloucestershire and Diego Garcia in the Indian Ocean.
Following reports the UK was preparing the HMS Prince of Wales aircraft carrier to deploy to the Middle East, Mr Trump said “we don’t need them any longer” and that “we don’t need people that join wars after we’ve already won!”.
No decisions have yet been taken to deploy the warship. Lib Dem leader Sir Ed Davey has called on the Prime Minister to cancel the King’s state visit to the US over Mr Trump’s “illegal war” and as the US leader “repeatedly insults and damages our country”.
Sir Keir stated the US and UK “are working together every single day, as they always have” despite the public criticism directed at him by Mr Trump.
“I had a telephone call with President Trump yesterday talking about the conflict in Iran and the region and what we were doing together, and that was important in terms of the ongoing discussion,” he said.
However, he emphasised that “decisions about what’s in Britain’s best interests are decisions for the Prime Minister of Britain, and that’s how I’ve approached all of the questions and all the decisions that I’ve had to make”.
Meanwhile, Tory leader Kemi Badenoch announced she would be tabling a parliamentary vote on Tuesday designed to maintain fuel duty “as low as possible” after the Chancellor revealed the longstanding 5p reduction would conclude in September.
“That’s the kind of measure that will actually help people with the cost of living,” she told the Press Association.
“The first thing that the Prime Minister should do is stop Rachel Reeves’s silly changes to fuel duty.
“Last week, she had an opportunity in the spring statement to announce measures to help all of those families out there who are struggling with the cost of living.
“Instead, she spent the statement telling us what a fabulous job she was doing.”