UK Chancellor Rachel Reeves has summoned the heads of five major banks for a meeting [Getty]
UK Chancellor of the Exchequer Rachel Reeves has called the bosses of the country’s five biggest retail banks for talks, in a sign of growing concern about the economic consequences of the war on Iran.
Reeves will hold a meeting with representatives of HSBC, Barclays, Lloyds, NatWest and Santander banks on Wednesday, amid concerns regarding the economic damage and rapid inflation the blockade of the Strait of Hormuz by the US and Iran could have on the UK.
Economists believe there could be a huge impact on mortgages and loans for UK households this year, along with rising inflation, with Reeves seeking to agree with bank bosses on ways to manage the crisis, according to The Guardian.
Banks have already pulled hundreds of mortgage packages and increased interest rates on those products that remain in the market amid the uncertain economic outlook, caused by what has been dubbed as ‘Trumpflation’.
The UK has suffered from low productivity since the 2008 financial crash and economic ripples caused by Brexit, with the Labour government making growth a cornerstone of its mandate in power.
It also faces pressure to increase military spending, due to the threat posed by Russia and President Donald Trump’s threat to pull the US out of NATO unless European countries pay a larger share on defence spending.
Right-wing news channel GB News reported on Monday that Reeves is considering issuing ‘war bonds’ to cater for a £17.6billion defence spending push needed to bring military spending up to 3 percent of the GDP. This idea is reportedly being backed by leading figures in the Labour Party.
The assault on Iran has resulted in a massive decline in maritime traffic in the Strait of Hormuz, where before the war, around a fifth 0f the world’s oil passed through, resulting in a sharp rise in energy prices.
Hopes that a long-term agreement between the US and Iran could be reached were shattered this weekend, after American forces raided an Iranian ship and Tehran saying it will not attend peace talks in Pakistan unless a blockade of its ports ends.
Oil and gas prices jumped 5 percent overnight, while stock markets across Europe plummeted, with the UK’S FTSE seeing a drop by 0.4 percent and the German DAX falling by 1.3 percent.
The uncertain economic outlook for the UK and Donald Trump’s attacks on his leadership has seen Prime Minister Keir Starmer pursue closer ties with European powers.
