(qlmbusinessnews.com . Mon 16th Jun, 2025) London, UK —
Rachel Reeves Commits to Energy Security and Defence Spending in Wake of Global Oil Price Hike
In response to the escalating conflict between Iran and Israel and its potential impact on the UK economy, Chancellor Rachel Reeves has pledged the government will do “whatever it takes” to shield citizens from adverse economic results. Speaking on the Reporters's Sunday with Laura Kuenssberg programme, Reeves emphasized her commitment to safeguarding against the threat of surging energy costs without ruling out any possible measures.
The recent military skirmishes between Israel and Iran have prompted a significant uptick in global oil prices, a development that could have ripple effects across the economy by driving up the costs of fuel and, more broadly, fuelling inflation. This turn of events echoes the aftermath of Russia's invasion of Ukraine in 2022, which saw oil prices surge to nearly $130 a barrel, pushing up prices for consumers on a wide array of goods and services.
Despite the current oil price standing at about $75 a barrel, a reduction from its peak earlier in the year, Reeves conveyed a firm stance against complacency. The Conservative government previously intervened to mitigate the impact of soaring energy prices on households following the outbreak of the Ukraine conflict, although Reeves remarked that the current situation has not reached a similar level of severity.
Reeves revealed her strategic decision to boost spending on defence and energy security in the recent Spending Review as a precautionary measure against such crises. She criticised past underinvestment in domestic energy production for leaving the nation vulnerable and highlighted the government's commitment to advancing nuclear, offshore and onshore wind, and carbon capture and storage technologies to enhance the UK's energy self-sufficiency.
Amid the challenges posed by the completion timeline of these investments, some measures, including investments in home insulation, are expected to offer benefits in the shorter term. Lord John Browne, the former BP CEO and present chair of BeyondNetZero, underscored the urgency of focusing on energy security and accelerating the transition from fossil fuels. However, he also cautioned that some of the government's ambitious plans might require more time to come to fruition than currently anticipated.
Shadow chancellor Sir Mel Stride raised concerns about the global economic repercussions of the Israel-Iran conflict, including its potential effects on oil and equity prices, trade, inflation, and interest rates. Highlighting the need for a more robust UK economy to weather these challenges, Stride criticised the government's fiscal policy decisions, particularly tax increases on businesses, for exacerbating inflationary pressures.
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