UK Faces Energy Shock as Reeves Responds to Spring Forecast Amid Middle East Crisis
The UK is bracing for economic uncertainty as Chancellor Rachel Reeves prepares to respond to the Office for Budget Responsibility’s (OBR) Spring Forecast, with global energy markets in turmoil following the escalating conflict in the Middle East.
Energy Prices Soar, Markets Plunge
Oil prices jumped over 7% and liquefied natural gas (LNG) surged more than 40% after Qatar halted LNG production and Saudi Arabia temporarily shut down units at its Ras Tanura oil refinery following attacks by Iran.
The spike in energy prices threatens to reignite the UK’s cost-of-living crisis, pushing household energy bills higher and putting upward pressure on inflation. Analysts estimate that, if sustained, these price increases could add around 0.9 percentage points to headline inflation, with 0.2 from petrol and 0.7 from household gas and electricity.
Global stock markets also reacted sharply, reflecting fears of a broader economic slowdown triggered by rising energy costs and geopolitical uncertainty.
Reeves to Emphasize Economic Stability
Despite the turbulence, Reeves is expected to stress that the government has the “right economic plan for the country” in a world made more uncertain by geopolitical developments.
Her message to Parliament is likely to focus on:
- Maintaining stability in public finances
- Investing in infrastructure and growth initiatives across the UK
- Building a balanced economy that benefits all regions, not just a few areas or sectors
- Ensuring the state supports growth rather than standing aside
The chancellor is not expected to announce major policy changes today, as the UK government has committed to holding its main fiscal event in the autumn.
The Spring Forecast Agenda
The UK’s economic calendar on the day of the forecast includes:
- 8:00 GMT – Worldpanel supermarket inflation and sales figures
- 9:30 GMT – ONS data on mergers and acquisitions for UK companies (Oct–Dec 2025)
- 10:00 GMT – Flash estimate of eurozone inflation for February
- 12:30 GMT – Chancellor Reeves’ spring forecast statement
- 13:00 GMT – Publication of OBR spring forecasts
- 14:30 GMT – OBR press conference
What It Means for the UK
The combination of Middle East tensions, rising energy prices, and market volatility underscores the fragility of global supply chains and the vulnerability of domestic households to sudden shocks.
The government’s response will aim to reassure businesses and consumers that fiscal plans remain on track while acknowledging the unpredictable external factors that could affect growth and inflation.
