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. "At this stage I think
UK's Reeves says it is too soon for major energy relief as Iran war drives prices higher
Government Response to Rising Energy Prices Amid Middle East Conflict
By David Milliken
LONDON, March 11 (Reuters) - British finance minister Rachel Reeves said on Wednesday she would consider action to shield households from surging energy costs due to the conflict in the Middle East, but that it was premature to cap tariffs or freeze fuel duty now.
Britain's Labour government has faced growing calls from other political parties to cap regulated household energy tariffs - due for review in late May - and to scrap a planned rise in vehicle fuel duty in September.
Current Government Stance on Energy Relief Measures
Reeves said it was too soon to decide on those matters and she would focus instead on boosting competition and curbing "price-gouging" on petrol and heating oil, while the government urged the U.S., Israel and Iran to deescalate the conflict.
"We are looking at a number of scenarios and monitoring very carefully this situation," Reeves told lawmakers at a regular hearing before the British parliament's Treasury Committee.
Historical Context: Energy Subsidies in 2022
BIG SUBSIDIES IN 2022 WHEN ENERGY BILLS SPIKED
After energy bills spiked in 2022 following Russia's invasion of Ukraine, inflation exceeded 11% and the government spent around 78 billion pounds ($105 billion) on household and business subsidies.
Inflation and Borrowing Outlook
An official with Britain's fiscal forecasters said on Tuesday inflation could end the year near 3% instead of the 2% assumed by the Office for Budget Responsibility if energy prices stay elevated.
Both the prospect of higher inflation and greater public borrowing have pushed up Britain's borrowing costs since the conflict began, outpacing increases in other major economies.
Asked if Britain could again fund major cost-of-living support, like in 2022, Reeves said: "Any future package, if it was necessary, will be more affordable."
She added that it was now more practical to offer targeted support to poorer consumers than four years ago when almost all households benefited from subsidies.
Fuel Duty Policy and Market Oversight
FUEL DUTY REMAINS 'UNDER REVIEW' - STARMER
Prime Minister Keir Starmer has said he wants to speed up an increase in defence spending, though Reeves said the funds also needed to be spent more effectively.
He told parliament on Wednesday that the fuel duty remained "under review". A 5 pence per litre fuel duty cut, introduced in 2022, is scheduled to be phased out from September.
No British government has raised the level of fuel duty since 2011.
Market Regulation and Consumer Protection
The Competition and Markets Authority is reviewing household complaints about suppliers of heating oil, used mostly in rural areas and in Northern Ireland.
Last month, the government launched a motor fuel-price database, which retailers must update within 30 minutes of any price change.
($1 = 0.7458 pounds)
(Additional reporting by Andy Bruce; Editing by Bernadette BaumEditing by Bernadette Baum)
