Politics newest: Fears of world recession over oil costs after Reeves criticised over vitality invoice assist | EUROtoday

Wes Streeting sought to defend the federal government’s method to an anticipated rise in vitality payments amid the Iran conflict, which he warned would make enchancment within the economic system “much harder”.

Asked whether or not “targeted support” meant that the middle-class must really feel the ache with none assist, the Health Secretary instructed BBC Radio 4’s Today programme: “Or put a different way, I will be feeling, as a higher earner in this country, a difference in my living costs.

“Will they be pinching me in the pockets in the same way that they might impact on my mum, who is a cleaner on the minimum wage? No.”

Asked whether or not he thought that was truthful, he mentioned: “Look, we know that the public finances are in a precarious situation. That’s what we inherited.

“We know that the economy has had to go through a huge amount of strain over the last decade, partly as a result of things like the pandemic, partly as a result of reckless political choices like Liz Truss’s mini-budget, and the challenge the Chancellor has is, she’s got to try and drive improvement in the economy, confronting the world as it is, not as we would wish it to be.

“And I can’t tell you how much my heart sank when the Chancellor was delivering the spring statement only weeks ago, where she was able to talk confidently about falling interest rates, falling inflation, wages finally rising faster than the cost-of-living as a result of the choices she is making, knowing full well, as she did, we all did, that what was going on in Iran would make those numbers and that improvement much harder, but she’s confronting that challenge head-on.”

Millions of households will get no assist to pay hovering vitality payments, Rachel Reeves has indicated whereas warning the Iran conflict will create “significant” challenges for the UK economic system.

The chancellor rebuked the earlier Conservative authorities for offering “blanket” assist within the wake of Russia’s assault on Ukraine, which she mentioned had price the nation tens of billions of kilos.

Instead, Ms Reeves made clear Labour ministers will supply focused somewhat than common assist “to those who need it most”.

But the chancellor’s method has drawn criticism because the disaster within the Middle East has pushed up oil and fuel costs, hitting motorists as they refill on the pumps, whereas the typical annual family vitality invoice is predicted to rise by £332 in July.

The announcement was dismissed as “unbelievably weak” by Green Party chief Zack Polanski, who accused Ms Reeves of failing to “understand the scale of the cost of living crisis about to hit this country”.

Meanwhile, Tory leader Kemi Badenoch said scrapping taxes on energy bills would be “much better” than providing focused assist to guard towards an anticipated hike in prices.

The date of the King’s Speech is said to have been set for 13 May, just days after local elections are held across Britain on 7 May.

According to Politico, this means parliament will be prorogued, or formally discontinued, in the week of 27 April.

The timetable could potentially pile further pressure on the government to publish the remaining Mandelson files by such a deadline, or risk facing backlash for delaying publication until after the May elections.

There will be a global recession if the price of oil reaches $150 a barrel, the chief of financial giant BlackRock has warned.

Larry Fink, who runs the world’s largest asset manager, told the BBC that the world economy faces “profound implications” if Iran “remains a threat” and oil prices remain high.

The Middle East conflict has sparked turmoil in the financial markets, and Mr Fink has a unique insight into the global economy, with BlackRock controlling $14 trillion (£10.5tn) worth of assets and being one of the largest investors in the world’s biggest firms.

He thinks it is too soon to judge but likely that one of two extreme scenarios will happen.

In the first instance, he told the broadcaster that the war could settle, Iran could be accepted again by the international community, and oil prices could drop to where they were before the conflict broke out.

In the second, he warned there could be “years of above $100, closer to $150 oil, which has profound implications in the economy”, leading to “a probably stark and steep recession”.

The British Chambers of Commerce has warned that UK firms are “particularly exposed” to the economic impact of the crisis in the Middle East.

Stuart Morrison, analysis supervisor on the physique, mentioned: “For businesses across the UK, today’s inflation data represents the calm before the storm.

“CPI of 3 per cent in February shows an economy yet to be impacted by the shock of the Middle East conflict, with fuel prices falling. But our forecast published after the unrest began, shows that the war will delay the previously expected slowdown in inflation.

“UK firms are particularly exposed to the economic impact of the crisis in the Middle East as our electricity prices are tightly tethered to global gas prices. This will feed directly into higher costs and renewed inflationary pressure in the months to come.

“The cost of living and the cost of doing business are two sides of the same coin. The government must continue to keep all options on the table to help firms deal with rising energy bills. At the same time, tackling other cost pressures, from business rates to national insurance, must remain a key priority.”

Political reporter Athena Stavrou reports:

Wes Streeting has insisted the government shouldn’t go into a “defensive crouch” following a string of critical comments made by Angela Rayner.

The former deputy prime minister, who has widely been seen as a potential successor to Sir Keir Starmer, has publicly warned the party is “running out of time” to win back voters.

Asked about her comments on Monday, the health secretary said: “We came in with an enormous challenge, and a country that is in desperate need of some hope and optimism, and so I don’t think Angela Rayner is saying anything that people around the Cabinet table, including the prime minister, aren’t feeling.”

Pushed on whether the comments were a leadership pitch, he said: “I’ve been victim of this myself. We can’t have a culture in politics – certainly the prime minister does not support a culture where people can’t float ideas, can’t influence the battle of ideas and take part in it. That’s what we want.”

He added: “So I don’t think people should go into a defensive crouch when members of our team are saying challenging things.”

The February inflation data showed that clothing and footwear prices contributed to inflation, with prices up 0.9 per cent for the month – its highest level since March 2025 – after previously staying flat in January.

However, this upward impact on inflation was cooling inflation in other areas.

Inflation across the services sector eased slightly to 4.3 per cent for the month, dipping to its lowest level for almost four years.

Slower alcohol and tobacco price rises were also a drag on inflation, easing to 3.6 per cent for the month – the lowest since February 2022.

The slowdown was driven by falling inflation for the prices of beers, wines and spirits over the month.

Elsewhere, motor fuel inflation also eased back, with the average price of petrol falling by 1.6p per litre between January and February.

However, petrol and diesel prices have risen significantly since the latest data after the price of crude oil jumped due to the conflict in the Middle East.

Economists said on Wednesday that inflation is now set to accelerate over the coming months as the impact of the conflict feeds into the price of goods.

Chancellor Rachel Reeves has said the economic challenges from the Iran war may be “significant” and contingency planning is under way for energy bill support “for those who need it most”.

The crisis in the Middle East has pushed up oil and gas prices, hitting motorists as they fill up at the pumps and potentially pushing up domestic energy bills later this year.

Ms Reeves said work is under way on targeted help for households when the current energy price cap expires at the end of June and global prices could push up domestic bills.

She instructed MPs on Tuesday: “Contingency planning is taking place for every eventuality so that we can keep costs down for everyone and provide support for those who need it most, acting within our iron-clad fiscal rules to keep inflation and interest rates as low as possible.

“This is not a war that we started, nor is it a war that we joined… but it is a war that will have an impact on our country.

“The challenges may be significant but I promise to do what is right and fair, being responsive in a changing world and responsible in the national interest.”

An economist has warned the outlook for inflation has “radically changed” since the Middle East conflict broke out and the Bank of England is “clearly worried” about what this now means for the index.

Luke Bartholomew, deputy chief economist at Aberdeen, mentioned: “Today’s inflation report is little more than a relic of the world before the Iran conflict. While the February report was broadly in line with expectations, and confirms that inflation was on a path back to 2 per cent, the outlook for inflation has radically changed.

“Yesterday’s PMIs offered the first sign of how much the energy price shock is changing the inflation outlook, and this will start to show up in next month’s data, before building later this year when the energy price cap moves higher.

“Clearly, the Bank of England is worried about inflation. And while the underlying weakness of the economy means rate cuts would be painful, policymakers may decide they do not have the luxury of ‘looking through’ higher inflation, especially if the conflict does last longer than the market currently seems to be hoping.”

Business and money editor Karl Matchett reports:

In looking beyond inflation figures to the numbers that might affect it in future, oil is the big one right now of course.

This morning, Brent crude is at $95.60 – a drop of around 4 per cent compared to yesterday. It is still very high, but sticking below that $100 marker might be psychologically important as much as an indication that gently trending downwards suggests an end to the Iran war might be in sight, in the eyes of some.

Elsewhere, the closely-watched 2-year UK bond yield has dropped back a little from its spike on Monday – that is what led to the headlines you will have seen around ‘three or four interest rate hikes this year’. It is certainly not all the way back to where it was, and has actually inched back higher than yesterday – but regardless, few economists actually foresee the Bank of England raising rates at this moment. It does mean government borrowing costs are higher though, a concern to Rachel Reeves and co.

Shortly, stock markets around Europe will open and we will see what the day brings – overnight in Asia most indices were higher, including Japan, South Korea and India.