The UK HM Treasury has outlined its economic response to the Middle East conflict, including tax measures and actions to strengthen energy security. Chancellor Rachel Reeves told Parliament the approach focuses on stability, de-escalation, and coordinated international economic action following IMF meetings.
The UK HM Treasury has issued a statement delivered to Parliament by the Chancellor of the Exchequer, Rachel Reeves, setting out the Government’s economic response to the conflict in the Middle East, including a series of tax-related and energy security measures.
Addressing the House, the Chancellor said she was updating MPs following the Spring Meetings of the International Monetary Fund (IMF) and outlined continued government action to strengthen the UK’s economic and energy security amid rising global tensions.
She said the Government had a clear responsibility to respond to a changing global situation, stressing that economic policy and diplomacy were closely linked, with a focus on negotiation, de-escalation, and the reopening of key trade routes such as the Strait of Hormuz.
The Chancellor highlighted recent international discussions in Washington with finance ministers, including US Treasury Secretary Scott Bessent, and said the UK had agreed with other major economies to support a swift negotiated resolution to the conflict and avoid unnecessary trade restrictions affecting energy and food security.
She also confirmed continued economic pressure on Russia, further support for Ukraine through additional funding, and ongoing coordination with the US on measures relating to Iran.
Domestically, she said the Government was preparing for economic impacts already being felt, while rejecting what she described as “knee-jerk” responses that could increase inflation and interest rates.
Among existing measures, she cited the extension of the 5p fuel duty cut, a freeze on prescription charges, capped rail fares, and reductions in energy bills, alongside expanded industrial energy support aimed at lowering electricity costs for manufacturers.
She said these policies were designed to avoid repeating past mistakes, arguing that previous emergency energy support packages had been poorly targeted and had contributed to higher inflation and borrowing costs.
The Chancellor said the IMF had described the Government’s approach as the “appropriate response” to the crisis and welcomed coordination with other major economies on managing domestic economic impacts.
She added that recent economic data showed growth of 0.5% in the three months to February, falling inflation at 3%, and improvements in employment and real wages. However, she warned that the conflict in the Middle East was expected to weigh on growth and increase inflation pressures, according to updated IMF forecasts.
To address energy security, she announced further measures to reduce reliance on imported fossil fuels and accelerate domestic energy investment. These include new steps to support North Sea production through extended field lifetimes and tiebacks, as well as reforms to speed up renewable energy development and expand grid capacity.
The Chancellor also confirmed changes to the Electricity Generator Levy, extending it beyond 2028 and increasing the rate from 45% to 55%, with the aim of capturing excess revenues from high gas prices and supporting public finances.
She said the reforms would help reduce the link between global gas prices and domestic electricity costs, limit energy-driven inflation spikes, and support long-term price stability for households and businesses.
Concluding her statement, the Chancellor said the Government’s economic strategy remained focused on reducing costs, supporting those most affected by the crisis, and building long-term economic resilience in an increasingly uncertain global environment.
This announcement was made on 21 April 2026.
