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Iran war adds £500 to UK energy bills, IFS warns

Economy & businessEconomy
Key Points
  • Iran war expected to add £500 to energy bills and a percentage point to inflation, per IFS.
  • February borrowing hit record £14.3bn outside Covid, but full-year deficit fell to £132bn.
  • Tax receipts rose sharply, but debt interest costs surged to £97.6bn, second highest on record.

3 billion, the highest February borrowing on record outside of Covid, the Office for National Statistics said. 8 billion. 9 billion less than the same period the previous year.

7 billion, according to the Office for Budget Responsibility. 7 billion, £79 billion more than the equivalent period in 2024-25, the ONS reported. 3 billion.

5 billion rise in debt servicing costs. 8 billion. 6 billion, the second highest annual level on record.

8%, experts said. 1% rise in Gilt yields adds around £2 billion a year to the national interest bill, experts said. The Resolution Foundation warned of a potential £16 billion surge in government borrowing by 2029-30 due to the conflict.

Now that we have the conflict in the Middle East, I think it is utterly essential that the energy profits levy is removed.

John Swinney, First Minister of Scotland

6 billion headroom on her fiscal rules is at risk of being cut by nearly three quarters if the Iran war is prolonged, the foundation said. Chancellor Rachel Reeves said she extended the 5p cut for fuel duty twice since the election, saving the average motorist £90 a year. Reeves said she froze prescription charges for two years in a row and froze rail fares for the first time in 30 years.

Reeves said she is taking £150 off energy bills with additional help for those struggling with the cost of heating oil. Reeves said she expanded the British industrial competitiveness scheme to over 10,000 manufacturers. The IMF said Reeves' plan is 'the appropriate response' to the conflict.

Reeves said she will ensure the Competition and Markets Authority has the powers to stop profiteering and would meet supermarket and bank bosses later this week to ensure they are helping consumers. Energy bills are forecast to rise to nearly £2,000 in July when the next quarterly energy price cap comes into force, according to forecasts. Scotland's First Minister John Swinney called on the government to scrap the windfall tax on North Sea oil and gas.

Liberal Democrat leader Sir Ed Davey demanded a 'cast-iron guarantee' that the government will not allow the Gulf conflict to push up energy bills by £500.

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Iran war adds £500 to UK energy bills, IFS warns | Reed News