UK facing one of the biggest hits from energy shock, warns IMF
Britain is ‘especially exposed’ to higher oil and gas prices, says the global lender
Britain faces one of the biggest blows from the Middle Eastern energy crisis, the International Monetary Fund (IMF) has warned.
The IMF warned that the UK economy was “especially exposed” to higher oil and gas prices, and compared the impact to a “large sudden tax on income” for a family.
It said higher prices and weaker growth globally were now inevitable, warning: “The world faces yet another shock.”
Sir Keir Starmer on Monday urged the public to “act as normal” as he insisted fuel supplies were secure.
However, the Prime Minister admitted the Government could not tackle the fallout from the war in Iran “on its own”, as he urged business leaders to help.
Sir Keir called for a “joint effort” to protect households from steep price rises as bosses from across the energy, shipping and banking sectors were called to Downing Street for talks.
Rachel Reeves, the Chancellor, Andrew Bailey, the Bank of England Governor, and Ed Miliband, the Energy Secretary, separately met with other G7 finance and energy ministers for an emergency meeting.
In a joint statement, G7 ministers warned that “unjustified export restrictions” were worsening the oil crunch and urged nations to keep fuel flowing.
Countries such as China have already banned all fuel exports amid ongoing conflict in the Middle East, which has effectively stopped exports of oil and gas from the region.
Ministers signalled they were ready to unlock more emergency oil supplies to help stabilise prices if needed.
Oil rose as high as $116 a barrel on Monday before falling back to $112 in the wake of the G7 statement.
Donald Trump said he was willing to end the Iran war without a deal to reopen the Strait of Hormuz.
The US president suggested that if negotiations collapsed he would “obliterate” the country’s energy and water facilities but leave the waterway in Iranian control.
However, on Friday the US presented a proposal for an international “consortium” to control the Strait of Hormuz, sources told The Telegraph.
Mr Trump’s spokesman on Monday said the president was also considering a plan to ask Gulf states to help pay for the war.
Sir Keir insisted the Government was working with allies on a “viable plan” for reopening the Strait of Hormuz, through which roughly a fifth of the world’s oil and liquefied natural gas (LNG) passes.
[…]
The Prime Minister’s spokesman played down fears of fuel shortages. They said: “Fuel production and imports are continuing from diverse and resilient supply
“When it comes to supplies people should and can continue to act as normal. There hasn’t been an immediate impact here in the UK.”
The IMF said Britain’s dependence on gas meant the looming energy shock from the war in Iran would be similar to that experienced in 2022 when Russia invaded Ukraine.
That surge pushed UK inflation into double digits and forced the Government to cap energy bills.
The price of natural gas has risen more than 60pc since the war in Iran began. Although the spike is nowhere near as severe as the one seen four years ago, the IMF said a sustained shock would still be damaging.
The Telegraph: continue reading
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