Reeves defends fiscal plans as global energy prices soar

Rachel Reeves was accused of being “tone deaf” on energy prices yesterday as she delivered her spring statement in the Commons.

- DAVID MADDOX KATE DEVLIN

The chancellor tried to offer assurances to the House about the potential impact of Donald Trump’s war with Iran on oil and gas prices and how that may affect Britain. But she insisted that Labour's economic plan was “right”.

Ms Reeves defended her fiscal policy, saying the government was in a “better place” to deal with gas and oil price shocks than it was after the last general election amid growing tensions in the Middle East.

But she was challenged by Labour and opposition MPs over the need to have a plan to cap energy bills if the war escalates further.

It came as the Office for Budget Responsibility's (OBR) report painted a grim picture, warning that economic growth forecasts are down and that unemployment and net migration are set to rise.

Ms Reeves was at pains to put a positive outlook on the figures, claiming it showed the government “has the right economic plan for our country, in a world that has become yet more uncertain”.

She took aim at Reform UK and the Green Party and gave a warning to critics in her own party, cautioning against any “change of course”.

Following a highly politicised spring statement, the OBR also said that:

• Borrowing is forecast to fall to 4.3 per cent of GDP but still well above the 2 per cent target

• Real GDP growth is expected to slow from 1.4 per cent in 2025 to 1.1 per cent in 2026

• The unemployment rate will rise from 4.75 per cent in 2025 to a peak of 5.33 per cent in 2026

• Wage growth is forecast to slow to around 3.5 per cent in 2026 and then average 2.25 per cent a year

• In better news, the main rate of inflation will fall from 3.4 per cent in 2025 to 2.3 per cent in 2026