Reeves's talk of stability may be misplaced amid Iran war turmoil

"With unfolding conflict in Iran and the Middle East, it is incumbent on me and on this government to chart a course through that uncertainty to secure our economy against shocks and protect families from the turbulence that we see beyond our borders."

"Should the violence that has sent energy prices soaring abate, the impact on inflation and economic growth will be short-lived, in which case Reeves's bold claim about economic stability may just about stand. But if the conflict is prolonged, then the Office for Budget Responsibility's forecasts will look hopelessly out of date within weeks."

"Lower gilt yields or interest rates on government debt were a key reason the forecasts for the public finances have improved since the budget. But these gains will be eroded if the dramatic market moves of recent days are sustained."

Chancellor Rachel Reeves announced restored economic stability to Parliament, citing improved OBR forecasts with lower inflation and public borrowing projections. However, escalating Middle East violence threatens this outlook through rising oil prices and increased government borrowing costs. Financial markets have pushed up gilt yields as investors anticipate central banks cannot cut interest rates significantly amid rising inflation. The chancellor's claims depend on conflict remaining brief; prolonged violence would render current forecasts obsolete within weeks. Reeves emphasized the government's responsibility to protect the economy against external shocks, noting utility bills will fall in April through policy interventions. The improved public finances position relies heavily on sustained lower interest rates, which recent market movements now jeopardize.

Read at www.theguardian.com