Rachel Reeves ‘will impose another tax raid or increase borrowing’ amid Iran war | Politics | News
It has been suggested that Rachel Reeves would raise taxes on working people or increase borrowing to address the “significant” economic impact of the Iran war. Shadow Chancellor Mel Stride warned in the wake of the Middle East conflict that Ms Reeves had left herself “little room for manoeuvre” to fix Britain’s “fragile” economy. This comes as oil and gas prices soar amid Iran’s ongoing pressure on the Strait of Hormuz, a key global shipping route.
Mr Stride said: “The way this government operates when there’s a crunch in their fiscal position or there’s an obligation to step in and help in some way is to either borrow or tax people even more. I fear that what the chancellor will do is come back for more taxes or increase borrowing at a time when he’s creating a very fragile economy, where a very high level of debt, I’m afraid, can’t really provide a lot of firepower when it comes to helping people.”
He argued the Government should instead control spending, including “cutting the welfare bill, taking people off benefits and getting them into work”.
Oil prices have risen to as high as $120 a barrel due to the conflict in Iran, costing motorists in the UK more than £300 million in expensive fuel, according to analysis by the RAC Foundation.
The Chancellor warned on Tuesday that economic difficulties resulting from the war could be “significant” and promised to offer energy bill support “to those who need it most”.
He told MPs: “By operating within our strict fiscal rules to keep inflation and interest rates as low as possible, contingency planning is being put in place for every eventuality so that we can keep costs down for everyone and provide support to those who need it most.”
“This is not a war that we started, it is not a war that we participated in… but it is a war that will affect our country,” he added.
“The challenges may be significant, but I promise to do what is right and fair, sensitive to a changing world and responsible to the national interest.”
Conservative leader Kemi Badenoch said removing taxes on energy bills would be “much better” than offering targeted support to protect British homes from expected cost rises.
Ms Reeves announced plans to increase fuel duty by a further 5p starting in September. Ms Badenoch said: “Increasing fuel duty at this time is pure madness and let’s drill our own oil and gas in the North Sea.”
