Chancellor Rachel Reeves has stated that the United States made a ‘mistake’ by ending diplomatic negotiations with Iran and engaging in military conflict, offering significant criticism of the ongoing situation.
Call for De-escalation Amid Economic Concerns
Speaking at CNBC’s Invest in America forum, the Chancellor emphasized, ‘The best economic policy now, not just for the UK, but globally, is to de-escalate.’ The UK government has affirmed it will not participate in the US’s military blockade of the crucial Strait of Hormuz, which aims to exert additional pressure on Iran.
When questioned about whether growing differences between the UK and US over the conflict had impacted their ‘special relationship,’ Reeves responded negatively, adding, ‘Friends are allowed to disagree.’
This week, the International Monetary Fund (IMF) issued a warning that the US-Israel conflict with Iran could lead to a global economic recession, with the UK anticipated to be the most severely affected among advanced economies. Reeves expressed her belief that the conflict ‘had not made the world a safer place,’ noting that beyond the immediate impact on the UK economy, there would be long-term global economic hardship due to damage to oil and gas facilities in the Middle East.
Energy prices have surged since the conflict began over six weeks ago, leading to a significant reduction in traffic through the vital Strait of Hormuz shipping route.
Diplomacy Over Conflict
Addressing an audience at the Invest in America Forum in Washington DC, where she was attending the IMF’s annual conference, Reeves stated that while she shared the Trump administration’s strong disapproval of the Iranian government, the key question was how best to achieve change. She highlighted that Iran currently does not possess a nuclear weapon and asserted that diplomacy was the most effective method to prevent them from acquiring one.
‘There was a diplomatic channel open, conversations, formal discussions were happening,’ she said. ‘I think it was a mistake to end those and to enter into conflict, because I’m not convinced that we are safer today than we were a few weeks ago.’
Reeves noted a lack of clarity over the past six weeks regarding the US’s objectives in pursuing the conflict, whether it was to prompt a change in government, end any Iranian nuclear weapons program, or initiate diplomatic negotiations, which were already underway before the conflict. The US has recently focused its rhetoric on reopening the Strait of Hormuz to shipping to facilitate oil and gas exports. Reeves pointed out, ‘If that’s the aim, well it was open a few weeks ago.’
She also mentioned that the UK Prime Minister, Sir Keir Starmer, and French President Emmanuel Macron would host talks on Friday to discuss facilitating navigation through the Strait of Hormuz in the event of a ‘proper ceasefire.’ ‘We are ready to play our part. But the Strait of Hormuz was open, there was no tolling, a few weeks ago,’ she said.
US-UK Relations and Economic Outlook
Despite her candid criticism, the Chancellor affirmed her belief that the US and the UK maintain ‘a very good relationship,’ referencing the upcoming visit of the King. However, in an interview with Sky News, when asked to describe the ‘special relationship,’ President Trump reportedly responded, ‘With who?’ When pressed further, Trump remarked that it had ‘been better, but it’s sad,’ adding, ‘It’s the relationship where when we asked them for help, they were not there. When we needed them, they were not there.’ He also mentioned having given them ‘a good trade deal. Better than I had to. Which can always be changed.’
In its latest World Economic Outlook, the IMF revised its estimate for UK growth this year down to 0.8%. In January, prior to the escalation of hostilities, it had projected growth of 1.3%. Reeves acknowledged the significant impact of the conflict on the UK as a net gas importer, stating, ‘Our growth will be higher and inflation will be lower if the conflict comes to an end.’ She expressed confidence, however, that the UK economy would ‘beat the forecasts’ again this year, as it did last year.
Frustration and Differing Views
On Tuesday, Reeves conveyed to the Mirror her feeling of being ‘very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve.’ She attributed this frustration to the economic impact on UK families and businesses.
In contrast, US Treasury Secretary Scott Bessent earlier told the BBC that a ‘small bit of economic pain’ was justifiable for long-term international security. Bessent stated he was less concerned about the economic impact than the risk Iran posed to global security, adding that US and Israeli actions had mitigated the ‘tail risk’ of potential Iranian nuclear strikes against Western countries. The UK government, however, has stated there is ‘no assessment’ that Iran is attempting to target Europe with missiles.
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