Chancellor Rachel Reeves has expressed concerns about the potential threat to “economic stability” as a challenge to Keir Starmer’s leadership looms.
Recent data revealed a 0.3% growth in the UK economy in March and a 0.6% growth in the first quarter of this year. This growth, although slower than the revised 0.4% in February, indicates the emerging impact of the conflict in the Middle East.
These statistics, released by the Office for National Statistics, come amidst political unrest, with Health Secretary Wes Streeting expected to step down ahead of a leadership challenge to the Prime Minister.
Meanwhile, Angela Rayner, a former Deputy Prime Minister and a potential contender against Mr. Starmer, announced that she has been cleared of any tax-related misconduct by HMRC.
Reeves emphasized the effectiveness of the government’s economic strategy in light of the current challenges. She highlighted the importance of maintaining economic stability to safeguard the well-being of families and businesses.
Although not directly addressing the leadership contest, Reeves’s remarks coincide with a rise in UK government borrowing costs due in part to uncertainties surrounding the Prime Minister’s leadership, following disappointing local election results last week.
Gross domestic product was initially thought to have grown by 0.5% in February, showing a significant improvement after no growth in January and a marginal 0.1% growth in December.
Concerns linger about the sustainability of this recovery, especially with the recent Iran conflict and domestic political instability posing potential threats to economic growth and stability.
Economists, including Suren Thiru from ICAEW and Yael Selfin from KPMG, foresee challenges ahead as the repercussions of the Iran conflict start to impact the economy.
TUC General Secretary Paul Nowak emphasized the need for sustained economic growth and measures to address the cost of living crisis faced by working families, urging the government to prioritize job creation and fair distribution of resources.
In a similar vein, Simon Pittaway from the Resolution Foundation highlighted the strong economic start in 2026 but cautioned that the impact of the Iran conflict could dampen growth prospects, affecting household incomes and government finances.
