Keir Starmer sat at the head of the Cabinet Office Briefing Room A table on Monday afternoon with a guest list that told its own story. Bank of England Governor Andrew Bailey. Chancellor Rachel Reeves. Energy Secretary Ed Miliband. The Chief Secretary to the Treasury. Senior officials from the Office for Budget Responsibility. When you summon the central bank governor to COBRA, you are not managing a crisis. You are admitting to one.
The meeting, formally designated COBR(M) — the M denoting a ministerial-level session — was convened to address what the government readout described as “the domestic economic impact of the ongoing situation in the Middle East.” The bureaucratic language understates the severity. Britain’s economy is being battered by a conflict it did not start, cannot stop and is struggling to survive.
The Numbers
Gilt yields — the cost of government borrowing — hit their highest level since the 2008 financial crisis on Monday. For a government that has staked its economic credibility on fiscal discipline and market confidence, this is an alarm bell of the loudest possible kind. Britain’s bonds are declining more steeply than those of international peers, reflecting the market’s assessment that the UK is uniquely vulnerable: heavily dependent on imported natural gas, running persistent inflation and carrying public finances that were already stretched before a single bomb fell on Iran.
The energy price cap is forecast to jump 20% in July, adding £332 to the average household bill. Inflation, which the government spent two years painfully bringing down, could return to 5% by autumn according to some economists. Growth forecasts are being revised downward weekly. And the government has just committed to spending billions on defence that it does not have, funded by borrowing that the bond market is making more expensive by the day.
‘Every Lever Available’
Starmer told reporters before the meeting that he was “asking for every lever that’s available to the government to deal with the cost of living to be discussed at COBRA.” The phrasing is revealing. He did not say he was pulling those levers. He said he was asking for them to be discussed. The difference matters. A prime minister who was ready to act would announce action. A prime minister who is still working out what to do holds meetings about meetings.
The levers, such as they are, include an extension of the Household Support Fund, targeted energy bill rebates, a windfall tax top-up on energy company profits, and the temporary profit cap that the government’s own cost-of-living czar has been publicly demanding. Each has trade-offs. Rebates cost money the government does not have. A profit cap would anger the energy industry at a time when the government needs private investment in renewables. A windfall tax extension risks deterring the very domestic energy production that would reduce dependence on Gulf imports.
Planning for the Long Haul
The most significant signal from Monday was not what Starmer did, but what he said. Speaking to MPs before the COBRA meeting, the Prime Minister warned that “we’ve got to plan on the basis that it could go on for some time.” This is not the language of a leader who expects a quick resolution. It is the language of a government bracing for a prolonged economic siege.
Trump’s five-day postponement of strikes, announced hours before the COBRA meeting, may have offered a glimmer of hope. But Starmer, to his credit, did not take the bait. The readout from the meeting made clear that “the best thing we can do for the economy is to de-escalate and bring the conflict to an end” — but also that the government is not relying on de-escalation happening. It is preparing for the alternative. Whether it is preparing fast enough, and with enough ambition, remains to be seen.