The longer the Iran conflict lasts, the more likely it is that there will be an effect on the economy, Sir Keir Starmer has warned.
Speaking at a community centre in London, the prime minister said he understood people’s anxiety and that his government was “assessing the risks, monitoring and talking to our international partners” about reducing the “impact on people here”.
He argued that the economy was in a better place to withstand a shock to energy supply than in 2022, when Russia’s invasion of Ukraine led to prices soaring.
Global oil prices have surged in recent days over fears the US-Israeli war with Iran could lead to lengthy disruption to energy supplies.
The rise has prompted the G7, a group made up of the richest nations, to hold an emergency meeting to discuss the economic impact of the conflict.
In a social media post, Donald Trump said “Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A and World, Safety and Peace.”
The US president has been critical of the prime minister for not allowing the US to use British military bases for initial offensive strikes against Iran.
On Monday, Sir Keir said the two countries were “working together as they always have” but added that “decisions about what is in Britain’s best interest are decisions for the prime minister of Britain”.
On Sunday, the two leaders held their first phone call since the start of the conflict began. Downing Street has said they talked about the situation in the Middle East and military cooperation.
The prime minister’s spokesman would not be drawn on whether they discussed the president’s criticism of Sir Keir.
On Monday, the benchmark UK gas prices rose to 158p per therm, a sharp rise on two weeks ago when the level stood at 80p, but less than four years ago when the war in Ukraine saw prices surge to over 600p.
The increases prompted the then Conservative government to launch energy bill support schemes, costing around £44bn.
The current government has so far not committed to a similar package and speaking during his visit to a community centre, the prime minister noted that the energy cap would protect households from the immediate rises.
Last month, before the Iranian conflict began, Ofgem said the energy price cap would fall by around 7% from April, reducing energy bills for people in England, Wales and Scotland.
The cap means those on a variable tariff won’t see a price rise in their energy bills until at least July, when a new level for the price cap will be set.
However, the cost of heating oil – used by many households in Northern Ireland and in some rural areas – fluctuates more directly in response to oil prices and the Consumer Council of Northern Ireland has said the average price has risen by 81% in a week.
The conflict could also lead to immediate hikes in petrol pump prices as well as potentially creating a wave of inflationary pressures including for food and industrial chemicals.
Sir Keir said: “I do understand the anxiety now, at nine days into this conflict, where a number of people will be saying ‘well, now is the situation going to get worse, and how’s it going to impact me and my family?’
“At the moment, what we’re doing is monitoring the risk, working with others to mitigate the risk.
“It is important to acknowledge that that work is needed, because people will sense… that the longer this goes on, the more likely the potential for an impact on our economy, impact into the lives and households of everybody and every business.
“And our job is to get ahead of that, to look around the corner, assess the risk, monitor the risks, and work with others in relation to that.”
Conservative leader Kemi Badenoch said she was “worried” the prime minister was going to be “slow” to act on the cost of living.
She urged the government to commit to cutting fuel duty, which is expected to rise in September.
Badenoch added that her party had a “cheap power plan” which included scrapping net-zero targets and drilling for gas in the North Sea.
By BBC News
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