Chancellor Rachel Reeves Introduces Economic Plans To Mitigate Iran War Challenges.

House Of Commons, London; May 2026: In a couple of minutes ago, Chancellor Rachel Reeves in her address to the House Of Commons (British Parliament) has announcing the nature of support the Keir Starmer led government will give to help with the cost of living amid the impact of the US-Iran war.

The chancellor says the government “has the right economic plan”. She continued: “I said I would grow the economy, and last week the office for National Statistics confirmed that Britain’s economy was the fastest growing in the G7 for the first quarter of this year. We beat the Office of Budget Responsibilities forecast in the spring, with economic growth at 0.6% in the three months to March. And because of the resilience of our economy this week, the International Monetary Fund upgraded Britain’s forecast for this year”.

She has further reiterated, “I said I would cut borrowing. Borrowing last year was £20 billion lower than the previous year, and the latest forecasts show it falling in every year of this parliament. I said I would cut the cost of living. Since the election, interest rates have been cut at least 6 times. Real wages have continued to rise in every single month since I became chancellor. And yesterday the ONS confirmed that inflation fell in April faster than expected, making the UK the only G7 economy where inflation fell last month”.

But she then added that the war in the Middle East “poses a significant challenge to the world’s economy, including our own”, and called the conflict a ‘mistake’. The chancellor further asserted that the government does “stand ready to act if market conditions worsen significantly later this year” to support people with their energy bills.

Rachel Reeves points to energy regulator Ofgem setting the level of the energy price cap from July next week. She says that any future support to help people will be “targeted and temporary support” – rather than universal support for all people. The Chancellor has highlighted that her planned hike to fuel duty will be postponed until next year, which they have found out about yesterday.

Reeves then goes on to list a number of measures she is taking to support businesses.

• Introducing a £350m critical chemicals resilience fund,
• A new £120m fund to help the ceramics sector,
• A 12-month road tax holiday for HGVs,
• A cut to fuel duty on red diesel by over a third for farmers,
• A 10 penny per mile in tax-free mileage rates, backdated to April 2026.

She added: “Today, I am bringing forward specific changes to the taxation of foreign branch profits, changing how companies are taxed in relation to their overseas activities. Currently, some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no corporation tax on their UK energy trading profits. Today we are putting an end to that practice. We expect these reforms to raise hundreds of millions of pounds a year and fund the package of measures set out today, with costings certified by the OBR forecast in the usual way”.

The chancellor has announced a temporary cut to VAT on some attractions, from 20% to 5%. She says: “I recognise that what matters for families is not just getting by, but being able to enjoy time together without worrying about the next bill. “That is why I am launching the Great British Summer Savings Scheme to help families and support our hospitality sector”.

She said the VAT cut will apply to ticket prices for both adults and children, covering attractions such as fairs, theme parks, zoos and museums. It will include children’s tickets for cinemas, concerts, soft play and the theatre, and it will cut the cost of children’s meals in restaurants and cafes from 20% VAT to 5% as well. “These changes will apply across the UK from the start of the Scottish school holidays on 25 June, and run until the end of school holidays in England, Wales, and Northern Ireland on 1 September”.

Bus journeys are to be ‘Free’ and foods are to be cheaper! She also lays out a number of other measures, announcing bus journeys for those 15 and under in England, as well as a suspension of tariffs on a number of different food groups. She explained: “Today I am taking action by suspending tariffs on over 100 different foods sold in supermarkets. And I am clear that I expect supermarkets to pass these savings on in full to their customers”.

Reeves also adds that she’s bringing “tough new powers” for the Competition and Markets Authority and other regulators, as the government “will not tolerate any company exploiting the current situation to make excess profits”.

Immediately after Chancellor Rachael Reeves completed her speech, it was former Chancellor Mel Stride, in a sharp criticism has said, the Tories “welcome” her decision to delay a planned rise to fuel duty due to come into effect in September. It has been a long time coming”, he said. But then he asks: “Why did the chancellor fight us on fuel duty for so long? Why has she been so hell-bent on raising fuel duty during an energy crisis? Well, inevitably, the U-turn has finally come”.

The Liberal Democrats have sought to claim credit for a temporary cut to VAT for some attractions this summer, which has just been announced by the chancellor. Party’s Treasury Spokesperson Daisy Cooper, told the Commons: “I do feel as though we’re slightly through the looking glass. For 06 months, we Liberal Democrats have been calling for an emergency temporary VAT cut for hospitality, leisure and attractions and our pledge was fully funded. But for all this time, we have been told repeatedly that it was impossible to do these things, that there was no additional money”.

She welcomes Rachel Reeves announcing the suspension of tariffs on more than 100 food items, saying this is an issue of huge concern to many people. But she asks whether this could lead to ‘long-term pain’ and whether it will make British producers uncompetitive and undermine the sector.

She also highlighted that there will be more demand on outdoor attractions as we are due a hot summer and asks whether the chancellor will “look very carefully at the differences within the attraction sector, because children are priced out of play when they need to go indoors in the winter months, not so much in the summer months”.

Chancellor Reeves replied: “We’ve worked very closely with the Department for Business and Trade in identifying those sectors. On the issue of summer activities, indoor and outdoor”.

The chair of the body representing Britain’s hospitality industry has welcomed the government’s decision to introduce a temporary VAT cut for some fun attractions this summer. Kate Nicholls, the chair of UK Hospitality, said the cut is the “quickest and simplest way to lower prices and boost consumer confidence”. She has called it a ‘positive step’ and suggested that it should be extended to cover accommodation as this would “help tackle one of the biggest costs of a family holiday”.

But in a wider point, Nicholls continued: “This should now be viewed by government as a down payment on a wider shift to a lower VAT rate for the entire hospitality sector, to bring us in line with Europe. Our biggest competitors benefit from VAT rates that average around 10%, and can be as low as 7%, and the UK is a clear outlier normally at 20%. VAT is the single biggest lever it can pull to lower prices, tackle inflation, drive demand, boost spending, generate growth and create new jobs. I would urge it to be bold and cut VAT for the entire hospitality sector”.

Team Maverick.