LONDON (AP) — Britain’s Treasury Secretary Rachel Reeves on Tuesday sought to present a rosy picture of the state of Britain’s economy. Oil and gas prices have soared In the wake of Iran war progresses rapidly It casts a dark cloud over the outlook for the world economy.
Mr Reeves unveiled the latest UK economic forecasts compiled by the Independent Office for Budget Responsibility and insisted that the plans he has been making since Labor returned to power in the 2024 election are bearing fruit.
This year’s economic growth rate is expected to be slightly lower than the 1.1% forecast when the budget was drafted last November, but the forecast for 2027 and 2028 is both higher, at 1.6%. He added that inflation and borrowing are expected to fall more rapidly than previously thought.
“Today’s forecast confirms that the choices this government has made are the right ones,” she said.
Mr. Reeves had expected his remarks in the House of Commons to be relatively subdued, but economists have warned that a war with Iran could upend forecasts, depress growth, accelerate inflation and increase debt.
Perhaps most importantly, the price of Brent International Petroleum Standard has soared by more than 15% this week to more than $80 a barrel, while global gas prices, on which the UK is particularly dependent, have almost doubled. If both remain in place, they are certain to lead to higher energy bills for businesses and households, accelerating inflation and suppressing growth.
Reeves began his speech by acknowledging that the world has become “even more uncertain” in the past few days following the decision by the United States and Israel to launch an offensive against Iran that resulted in the deaths of Supreme Leader Ayatollah Khamenei and other members of Iran’s leadership.
“It’s up to me and this government to chart a course through that uncertainty, protect our economy from the shock, and protect our families from the chaos we’re seeing on the other side of our borders,” she said.
The British Labor government lost important support Since winning the 2024 general election, I have been hoping that 2026 will be the year that the situation becomes clear. uk economy It’s been on healthier footing for years now.
Some recent economic indicators suggest that growth will accelerate in the first half of 2026. Inflation is also expected to fall sharply in the coming months, prompting the Bank of England to cut interest rates further. Last month, banks maintained their key interest rates. unchanged at 3.75%.
