Chancellor Rachel Reeves has warned “the war in Iran will come at a cost to British families and businesses”, as US-Iran peace talks ended without a deal.
Ms Reeves said that although the scale of the costs were not known, the Government was committed to providing support to those who need it.
Britain will host further talks on reopening the vital Strait of Hormuz shipping lane with a coalition of countries next week.
The meeting will continue the Government’s efforts to restore freedom of navigation in the strait, which provides shipping routes for oil and gas.
It comes after the Prime Minister spoke to Donald Trump about the need for a “practical plan” to get ships going through the area amid suggestions Iran wants to charge vessels for passage.
US Vice-President JD Vance was in Pakistan for peace negotiations with Iran, although a 21-hour session ended without an agreement being reached in the early hours of Sunday.
Mr Vance said Tehran refused to commit to not build a nuclear weapon, casting uncertainty over a shaky two-week ceasefire.
Writing in The Times, Ms Reeves said: “I am going to be straight with people… the war in Iran will come at a cost to British families and business.
“These are not costs I wanted, but they are costs we will have to respond to. As Chancellor, I have vowed that my economic approach to this crisis will be both responsive to a changing world and responsible in the national interest.
“We don’t yet know the full scale of those costs, but the immediate priority must be to ensure that the ceasefire holds.
“That is the best protection we have against higher costs at home and at the IMF meetings in Washington this week I will be working with allies on the action we can take to guarantee freedom of navigation, including the Strait of Hormuz, to keep energy supplies moving again.
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“But I know rising prices are being felt now. So, we are taking action to keep costs down for families and provide support for those who need it most.”
Gas prices have risen sharply during the ongoing closure of the strait, through which 20% of the world’s oil was transported prior to the US and Israel’s decision to attack Iran.
“I know that rising energy bills are not only felt by households,” Ms Reeves added. “They are felt by business too, including the UK’s manufacturing sector that has faced uncompetitive energy prices for too long.
“So later this week I will be setting out the next phase of our plans to boost Britain’s competitiveness. I will also set out the principles that will guide how we support businesses in the months ahead.”
Dave Clark
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