The International Monetary Fund urged UK chancellor Rachel Reeves to resist calls for a sweeping energy‑support package as Britain grapples with the fallout from the Iran‑Israel conflict. IMF fiscal chief Rodrigo Valdés told the Financial Times that assistance should remain targeted and temporary, aligning with the fund’s broader push to shrink the UK deficit amid volatile global debt markets.

Reeves has pledged that aid will focus on the most vulnerable households and that any business relief will follow clear “principles” to avoid the kind of massive bailouts seen after Russia’s invasion of Ukraine. Treasury forecasts now show GDP expanding a modest 0.6% this year, below the IMF’s 0.8% projection and far shy of the 1.1% expected before the Middle‑East war.

Investors remain sceptical despite the IMF’s Fiscal Monitor projecting the deficit to fall from 5.4% of GDP last year to 1.6% by 2031. Borrowing costs have spiked, with a recent £15bn 10‑year debt syndication priced at just over 4.9%—the highest since 2008. The fund praised the UK’s consolidation plan but warned any relief must stay inside the fiscal guardrails Reeves has set.