Starmer vows to use ‘every lever’ to protect Brits from damage to UK economy
Sir Keir Starmer has vowed to use “every lever” to prevent households from being hit by higher energy prices amid growing fears the Iran war is wreaking havoc on the UK economy.
On Monday morning, the Prime Minister suggested an emergency Cobra meeting between the most senior government ministers and the Bank of England governor Andrew Bailey would look to prioritise addressing economic issues that are hitting Britons as a result of the war.
He indicated that the government would look to draw up new policies to lessen the economic hit on families across the country, with top City researchers downgrading the UK’s economic outlook for the year.
Starmer said: “Obviously Cobras are usually used for military considerations, consular considerations, but I think with the Iran war, most people are very concerned now, not only what they’re seeing on their screens in relation to the conflict itself, but also that question of: ‘How is it going to affect me and my family?’
“Today we’re looking at the economic impact, and I am asking for every lever that’s available to the government to deal with the cost of living to be discussed at Cobra. Hence we’ve got the Bank of England and others there.
“But I want to make sure that when it comes to the cost of living, we’re doing everything we possibly can at a very difficult period like this.”
Starmer to meet with Bailey
His comments came as the Iranian regime and US administration exchanged threats over key regional energy infrastructure.
President Trump gave Iranian leaders a 48-hour ultimatum on Sunday threatening to bomb Iran’s power plants if ships were not allowed to pass through the Strait of Hormuz, the critical stretch of water in the Middle East that is key for a fifth of oil and gas supplies.
Iran’s Defence Council said forces would look to block other trading routes if Trump launched strikes on key infrastructure.
Among the options that Starmer is likely to consider include bolstering powers at the Competition and Markets Authority to clamp down on profiteering.
On the weekend, Iceland boss Richard Walker, who was made a peer by Starmer, endorsed a temporary profit cap on energy companies.
Energy giants operating in the North Sea face a headline tax rate of 789 per cent as a result of the energy profits levy and higher corporation tax.
It has also been reported that officials are set to discuss the risk of rationing supplies and people rushing to stockpile fuel and other key goods.
Growth forecast halved
The Brent Crude Oil price rose slightly on Monday, hitting nearly $110 per barrel in early trading hours.
Economists will also have an eye over short-term gilts, with the two-year yield suggesting that markets are braced for up to four interest rate hikes.
The ten-year gilt yield went over five per cent on Monday, adding to government borrowing costs and reflecting analysts’ fears for the state of public finances.
KPMG UK chief economist Yael Selfin said growth this year was set to be around half of what it had expected while inflation would peak at around 3.6 per cent later this year on current assumptions.
Selfin also held that there would be one interest rate cut this year despite investors’ concerns about rate hikes.
She added that higher interest rates, weaker growth and a possible £5bn energy support package for households would “erode fiscal headroom” available to Rachel Reeves.