Finance
UK's reeves says it's too soon to judge impact of war on economy
Published by Global Banking & Finance Review®
Posted on March 11, 2026
2 min readLast updated: March 11, 2026
Quick Summary
UK Chancellor Rachel Reeves cautioned on March 11 that it's too early to assess how the Middle East conflict will affect UK inflation, growth, or interest rates, while affirming careful monitoring and scenario planning.
UK's Reeves says she will do what she can to soften energy price hit
Impact of Middle East Conflict on UK Economy and Government Response
LONDON, March 11 (Reuters) - British finance minister Rachel Reeves said on Wednesday it was too soon to judge the impact of the conflict in the Middle East on the UK economy but she would do what is possible to soften the hit to consumers.
Uncertainty Over Economic Impact
"At this stage I think it would be unwise to speculate on what the impact on inflation, growth or interest rates would be," Reeves told lawmakers.
"But of course we are looking at a number of scenarios and monitoring very carefully this situation," she said.
Inflation Concerns Linked to Energy Prices
Reeves has previously said inflation is likely to rise as a result of the rise in global energy prices caused by the U.S.-Israeli war with Iran.
An official with Britain's fiscal forecasters said on Tuesday the country's inflation rate could end the year at around 3% rather than 2% as assumed by the Office for Budget Responsibility if energy prices stayed at current levels.
Government Measures and Fiscal Strategy
Cost-of-Living Support and National Security
Asked whether Britain could fund big cost-of-living support measures, as it did in after Russia's full-scale invasion of Ukraine in 2022, Reeves said the government would "always make sure that we do everything we can to protect consumers but also to ensure our national security as an economy."
Defence Spending and Economic Resilience
Prime Minister Keir Starmer has said he wants to speed up an increase in defence spending.
"We are in a stronger position than when I became chancellor to respond to shocks like these, and we are in a stronger position in many ways than when Russia illegally invaded Ukraine," Reeves told parliament's Treasury Committee.
She added that it was now more practical to offer targeted support to consumers than it was four years ago.
Market Reactions and Investor Concerns
British government bonds have fallen sharply since the start of the conflict in the Middle East, in part due to concerns among investors about the risk of higher borrowing by the government to shield households and businesses from higher energy bills.
(Reporting by David Milliken and Andy Bruce Writing by William Schomberg)
Key Takeaways
- •Reeves emphasised uncertainty, stating it’d be unwise to speculate on specific economic impacts at this stage.
- •UK faces mounting inflation risks due to rising energy prices – Brent crude topped $80‑100 a barrel amid the Iran‑Middle East conflict (axios.com).
- •Forecasts already evolving: Oxford Economics estimates added 0.4‑point inflation lift in 2026; OBR’s GDP growth down to ~1.1% amid higher inflation risks (mpamag.com).
References
Frequently Asked Questions about UK's Reeves says it's too soon to judge impact of war on economy
1What did Rachel Reeves say about the economic impact of the Middle East conflict?
Rachel Reeves stated it is too soon to judge or speculate on the impact of the conflict in the Middle East on the UK economy.
2Is the UK government monitoring the economic situation related to the war?
Yes, Rachel Reeves confirmed that the government is looking at different scenarios and monitoring the situation carefully.
3Has any impact on inflation or interest rates been reported due to the Middle East conflict?
No specific impact on inflation or interest rates has been reported; it is still being assessed.
4Who reported and wrote this news article?
The article was reported by David Milliken and Andy Bruce, and written by William Schomberg.
