Middle East: Economic Update

Mel Stride Excerpts

Monday 9th March 2026 Commons Chamber

[Sir Mel Stride (Central Devon) (Con)]

I thank the Chancellor for advance sight of her statement and add the Opposition’s firm support for our armed forces.

As the Chancellor has made clear, these are very serious and concerning times, and developments in the middle east are already having profound consequences for our economy. Oil prices have surged above $100 a barrel for the first time since the 2022 energy crisis. That alone is enough to have huge knock-on effects for households and businesses: families filling up their car will already have noticed petrol prices increasing, and fixed-price energy tariffs have either been increased or pulled from the market. We are already seeing British households worse off as a result of this conflict.

I am grateful to the Chancellor for updating the House on her meetings with other G7 Finance Ministers, and I welcome her commitment to supporting action to ease pressure on global supply by using strategic oil reserves. That, however, will go only so far.

As the Chancellor has said, the longer this conflict continues, the more likely it is that we will see a sustained period of higher prices. That, in turn, will have implications for interest rates and our cost of borrowing. The longer that lasts, the more likely it is that higher inflationary expectations will become anchored. If that happens, monetary policy will need to adjust accordingly, which may mean higher mortgages for homeowners who have only just begun to see some relief.

Gilt markets have already been responding to these events, which could mean that the forecasts we were given just last week from the Office for Budget Responsibility end up looking very different. We must continue to monitor developments closely.

Where the Opposition clearly differ from the right hon. Lady is in her approach to the economy in the run-up to this crisis, as her gross mismanagement has left us far more vulnerable than would otherwise have been the case. She refers to inflation, which was bang on target when we left office; thanks to her choices, though, it rose back up to almost 4% last year—the highest in the G7—and remains elevated, which is far from ideal given the threat of a significant further spike in energy prices. Extraordinarily, the Chancellor has just now reconfirmed that the Government will press ahead with a rise in fuel duty later this year.

Borrowing is running higher than was forecast when the Government took office—we are spending well over £100 billion a year on debt interest alone. This leaves us far more vulnerable to rising borrowing costs. The Government are also continuing to impose ruinously high taxes on our oil and gas sector and choosing to rely on imports instead of maximising our own domestic energy supply. That is proving to be an incredibly short-sighted approach. However, as the right hon. Lady has just told us, there will be no change in direction. That is the wrong choice. More broadly, of course, business confidence has hit record lows, and unemployment has risen back to pandemic levels. Our economy is weaker as a direct result of this Chancellor.

Last week, at the spring statement, the right hon. Lady had an opportunity to change course; instead, we got no action at all, just breathtaking self-congratulation and denial. She had a vital opportunity to come to the House with a plan to get the economy growing, but she did not do so—not least because this weak Government have caved in to their own Back Benchers, who prefer higher welfare spending to fixing our economy.

Today, let me reiterate our offer to support the Government if—even at this late stage, and particularly given the gravity of the current global outlook—they do the right thing by showing some backbone and coming forward with a proper plan to cut welfare spending and strengthen our economy so that we can properly support hard-working families through this difficult time. That is the very least that the British people deserve.

Finally, let me ask the right hon. Lady the following questions. Will she urgently reconsider her decision to implement the first increase in fuel duty in 15 years? Likewise, will she urgently reconsider her decision to continue with the crippling taxes being imposed on North sea oil and gas producers? On the Fingleton review on nuclear, can she clarify whether the Government are accepting all the recommendations, as Ministers previously committed to accepting?

Will the right hon. Lady give further details on what additional economic action is under consideration internationally if the conflict continues? What measures are the Government considering to support households in the event of a sustained period of higher prices, and what action is being considered as part of the Financial Secretary to the Treasury’s work to support those reliant on heating oil?

Are the Government tracking the Iranian regime’s illegal funding sources to ensure that UK financial systems are not facilitating funds that are being used to support repression? Will the right hon. Lady confirm that there is sufficient resource available in the special reserve so that our brave servicemen and women have the support that they deserve?

[Rachel Reeves]

I thank the shadow Chancellor for his questions. The Government believe that the best way that we can protect families and businesses from this conflict is through de-escalation. We heard nothing in the shadow Chancellor’s response about what the Conservatives’ view is on de-escalation. We believe that it is important that we get back to the negotiating table and do not escalate this conflict, but I am not sure that that is the view of the Conservatives.

We know that commitment to greater energy security can help guard against shocks. After inaction and delay from the Conservatives while they were in government for 14 years, this Labour Government are committed to investing in and building new nuclear. That is why we are backing Sizewell C and small modular reactors— neither of which were funded by the previous Government, but both of which were funded at the spending review, because this Government are backing Britain’s energy security. This Labour Government are backing the industries of the future, such as carbon capture and storage—not funded by the Conservatives, but funded in the spending review, because we back Britain’s energy security. Through the National Wealth Fund, we are investing in floating offshore wind and our docks—not funded by the Conservatives, but funded in the spending review, because we back Britain’s energy security.

In 14 years the Tories did nothing. They failed when we needed new nuclear. They stood by and allowed the loss of gas storage facilities at Rough. They failed to fix the broken planning system to enable us to build renewables, and they had an effective moratorium on onshore wind, which is the cheapest form of energy. We are taking a different approach in the interests of our economy and energy security.

On energy bills, I urge the shadow Chancellor not to scaremonger. The £150 cut to energy bills that I announced in the Budget will continue, as has been confirmed by Ofgem. We removed the failed energy company obligation scheme, and we removed a number of levies from bills. On heating oil, those conversations will happen this week, and we are working closely with MPs and colleagues in Northern Ireland to make sure that things are working well. The Minister for Energy at the Department for Energy Security and Net Zero met the heating oil sector on Friday and spoke this morning to the Competition and Markets Authority. There is not currently a problem with supply, but if Members have individual issues around supply, they should make sure that they get in contact with DESNZ.

The shadow Chancellor asked about fuel duty. Fuel duty would have risen by 8p if I had used the plans that I inherited from the Conservatives. We have had two Budgets in which the freeze on fuel duty was extended, and both times it was voted against by all Opposition parties. It is a little rich for the Tories now to say that they want to reduce fuel duty when they voted against Budgets that froze it.

On the energy profits levy, the shadow Chancellor must have a short memory, because he was in the Cabinet that introduced the energy profits levy. It was introduced for a reason. Windfall profits were being made by the energy companies and there was a need to help consumers with bills, which is exactly what we have done.

On the public finances, I am not sure the right hon. Gentleman listened to my statement last week or my statement today. The deficit has reduced from 5.3% to 4.2% of GDP. This is the first time in six years that the budget deficit has been less than 5% of GDP. In fact, in the 14 years that the Conservatives were in office, borrowing was higher than the G7 average; it is now lower than the G7 average, and it is coming down in every year of this Parliament. On inflation, I will not take any lessons from the party whose policy took inflation to more than 11%.

The right hon. Gentleman, as a former Work and Pensions Secretary, says that we should be spending less on welfare. Well, it would have been nice if he had done something about it when he was in charge. We are reforming the welfare system, which the Conservatives broke.

On Fingleton, we commissioned the Fingleton review because we are determined to build nuclear power, unlike the Conservative party. On oil reserves, we have reserves equivalent to 90 days of oil imports. As the G7 confirmed today, we will be making further announcements on that. On gas reserves, it was the Conservative party that closed the storage facilities at Rough. National Gas has confirmed today that our gas reserves are at a comparable level to last year and the year before that. The numbers that are being reported are utterly misleading, because gas comes from a number of sources—interconnectors, liquid natural gas and our storage facilities—so I would really rather the Conservative party did not scaremonger when people want certainty.

On money laundering, of course we have the very strictest rules. On the special reserve for defence, of course we will ensure that the Ministry of Defence has all the money it needs to provide support for our armed forces.