Rachel Reeves’s plans could be hit by Middle East conflict, say economists

The Guardian - World NewsEN 3 min read 100% complete by Heather Stewart Economics editorMarch 3, 2026 at 06:00 AM

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Economists are warning that the Middle East conflict and resulting surge in global energy prices could undermine UK Chancellor Rachel Reeves's plans to control inflation and stimulate economic growth. As Reeves prepares to deliver her spring forecast, experts suggest that rising oil and gas prices may render the Office for Budget Responsibility's (OBR) projections outdated. The increased energy costs threaten to worsen the cost of living crisis and potentially delay anticipated interest rate cuts by the Bank of England. Reeves intends to emphasize economic stability and the positive impact of previous decisions, but analysts caution that the conflict's duration will significantly influence the inflation outlook and cost of living pressures. Markets have already lowered expectations for near-term interest rate cuts in response to the crisis.

Key Entities & Roles

Key Player Opposition Context

United States 30% Bank of England 40% IG 40% Chris Beauchamp 40% James Smith 50% Resolution Foundation 50% Eurasia Group 60% Mujtaba Rahman 60% Office for Budget Responsibility ×270% Middle East 80% Rachel Reeves ×590%

Keywords

middle east conflict 90% energy prices 80% inflation 80% interest rates 70% economic growth 70% oil prices 60% cost of living 60% gas prices 60% public finances 50% fiscal rules 40%