UK Won’t Let US Trade Deal Dictate Iran Policy | Rachel Reeves Exclusive Interview

Chancellor of the Exchequer Rachel Reeves said the UK shouldn’t sacrifice its principles for more favorable trading terms with the US, as she stood by the government’s decision to withhold British backup for the American-Israeli assault on Iran.

“You can’t make a decision about whether to get British armed forces involved in a conflict because it may or may not make it more likely to get a trade deal,” Reeves told Bloomberg’s Stephanie Flanders in an interview, when asked about the impact of the UK’s decision on UK-US talks to improve trading terms. “We judged that there was not a legal basis for offensive action on Iran.”

The US-Israeli strikes on Iran have strained ties between President Donald Trump and UK Prime Minister Keir Starmer, with Trump criticizing Britain’s premier for declining the US’s request to use its bases for offensive operations against the Islamic republic.

Speaking at the White House on Tuesday, Trump said he was “not happy” with the UK, adding, “This is not Winston Churchill that we’re dealing with.”

The pair had previously enjoyed a warmer relationship that helped the UK to secure relatively advantageous tariff terms last year, before a recent US Supreme Court Ruling threw those into doubt. The two countries also made progress toward securing a broader trade deal, although that has stalled in recent months.   With Iran launching retaliatory strikes against a host of countries in its vicinity, the chancellor said she’s monitoring developments “very closely” and will do “everything in our power to protect businesses and and families in the UK” from the economic fallout.

“We have to see how things evolve in terms of where oil and gas prices go going forward,” Reeves said, adding that she would be meeting with North Sea Oil companies

including Equinor, Shell and BP on Wednesday to get their insights into how oil and gas prices will evolve. “We are only just into what is happening in the Middle East.” Reeves was speaking after giving her spring economic update in the House of Commons on Tuesday, where latest figures from the Office for Budget Responsibility warned of weaker growth this year — even before factoring in any impact of war in the Middle East.

However, the OBR also predicted lower expectations for government borrowing and an increase in the size of Reeves’ buffer against her fiscal rules, helped by declines in borrowing costs and an improved tax take in the weeks before the outbreak of war. Those improvements “put us in a stronger position to be able to withstand the shocks, including the shock that we are likely to be responding to in the weeks and months ahead,” she said.

On trade with the US, Reeves said she was confident the deal agreed last year could be maintained.

“We are in constant negotiation and dialogue with the US administration,” she said. “Of course, there are other areas as well where we want to go further with our trade links with the US.”

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