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Key events
As we mentioned in the opening post, Rachel Reeves is under pressure to cancel the planned increase in fuel duty due in September which will cause drivers to pay more for petrol and diesel as the government rolls back a temporary cut that was introduced in 2022 in response to Russia’s full-scale invasion of Ukraine.
At her budget last year, Reeves said the 5p cut would be unwound between September 2026 and March 2027, but the Conservatives and Liberal Democrats have called for her to change course in light of the Israeli-US war with Iran which could cause immediate hikes in petrol pump prices.
Conservative party leader Kemi Badenoch said:
Rachel Reeves is planning to hike Fuel Duty for the first time in 15 years at the worst possible moment. Last week at the Spring Statement she knew full well that global instability was pushing oil prices up again.
Instead of helping families and businesses, she chose to pat herself on the back. Now motorists across the country face the double hit of rising petrol prices and higher fuel tax. This is Labour’s instinct: higher taxes and the wrong priorities. Labour must axe the Fuel Tax rise!
Lib Dem leader Ed Davey went further, saying the prime minister should convene the government’s emergency Cobra committee “to personally get a grip on the threat of brutal price shocks facing families, pensioners and businesses”.
Ministers under pressure to bring in cost-of-living support package amid inflation fears
Good morning and welcome to our live coverage of UK politics. The chancellor, Rachel Reeves, and the prime minister, Keir Starmer, indicated yesterday that the government could be prepared to intervene to protect UK households against major cost-of-living shocks to come at the next energy price cap, as Brent crude, the international benchmark, surged as high as $119.50 a barrel on Monday.
Brent then slid back to about $91 when Donald Trump described the US-Israeli war on Iran as “very complete, pretty much” in an interview with CBS News yesterday evening.
His contradictory statements on the timeline for the duration of the war have added to market turbulence, with fears of a prolonged conflict causing governments to consider support packages to protect people from higher prices caused by a predicted surge in inflation.
The British Chambers of Commerce forecast that inflation would remain “firmly above” the Bank of England’s 2% target, noting the “highly uncertain” global situation.
Following a call with her G7 counterparts on Monday, Reeves said she was ready to support “a coordinated release” of international oil reserves to ease the economic shock of the escalating crisis.
She also called for action to “guarantee the security of vessels” passing through the strait of Hormuz, one of the world’s most important shipping routes. The war has severely reduced sea traffic through the strait which carries about one-fifth of global seaborne crude oil.
Starmer said a prolonged conflict would affect the “lives and households of everybody” but vowed that ministers would seek to “get ahead” in case of that event.
Reeves is due in the Commons for Treasury questions at 11.30am as she faces calls to ditch a planned 5p rise in fuel duty in September and set out an emergency package to shield households from global energy price rises and inflationary pressures.
