UK Chancellor Rachel Reeves has described the US-Israeli war against Iran as a “mistake” that has not made the world safer, while warning of significant economic risks stemming from the conflict. Speaking at an event in Washington, Reeves emphasized that diplomatic efforts to prevent Iran from obtaining a nuclear weapon should have been allowed to continue. She criticized US President Donald Trump’s decision to escalate military action, which has led to Iranian retaliation, including strikes against Gulf states and the closure of the Strait of Hormuz, a vital oil and gas shipping route.
Economic Impact and Diplomatic Concerns
Reeves warned that the conflict has caused long-term damage to oil and gas facilities in the Middle East, with lasting economic consequences even if hostilities end. The International Monetary Fund (IMF) has projected that the UK, as a net importer of gas, will face the largest hit to growth among wealthy economies due to the war. Reeves expressed confidence that the UK could mitigate these effects if the conflict de-escalates and the Strait of Hormuz reopens.
Diverging Views on Conflict Strategy
Reeves’ remarks come amid growing transatlantic tensions over the Middle East crisis. Trump has publicly criticized UK Prime Minister Keir Starmer for refusing to back the US-Israeli military campaign, hinting that a trade agreement struck last year could be renegotiated. Starmer, however, has remained firm in his stance, stating he would not yield to pressure. Meanwhile, US Treasury Secretary Scott Bessent defended the economic pain caused by the war, arguing it was necessary to prevent Iran from acquiring nuclear weapons.
Global Economic Response
In a joint statement with finance ministers from other nations, Reeves called for a coordinated and responsible economic response to the crisis. The group emphasized the need for a negotiated resolution to the conflict and the reopening of the Strait of Hormuz to mitigate impacts on global growth and energy prices. The IMF has warned that a worldwide recession remains a “close call” in severe scenarios, underscoring the urgency of diplomatic efforts.