Her hesitancy came as Donald Trump on Sunday said the US Navy would block the Strait of Hormuz – a vital transit route at least one fifth of the world’s oil, gas and fertiliser – to any ship that had paid a toll to Iran.
This could extend a conflict that has already squeezed energy supply chains and driven up fuel and electricity costs. Brent crude prices jumped as high as $104 a barrel on Monday morning after closing on Friday at $94.
Ian Stewart, the Deloitte chief economist, said the Iran war was “reshaping business sentiment” after a survey of finance chiefs by the consultancy found confidence at a six-year low. The barometer fell to -57pc in the first three months of this year, from minus 13pc the previous quarter.
Mr Stewart said: “It’s created a shock to CFO confidence, lowering optimism to levels we haven’t seen since the early days of the Covid-19 pandemic.
“Finance leaders are coping with high levels of external uncertainty, and their focus is on managing risks from geopolitics, rising energy prices and higher financing costs.”
A separate survey of 4,000 businesses by accountancy firm BDO found output had dropped to a five-year low.
“The decline in business output and confidence underlines the UK’s exposure to the global energy shock,” said Scott Knight, head of growth at BDO.
“Confidence will not be restored until energy flows stabilise under a lasting ceasefire.”
BDO warned the combination of increasing price pressures and falling demand would prompt businesses to stop hiring workers, with employment intentions at a 15-year low.
Britain’s manufacturers were already labouring under the highest electricity prices in Europe, but these will rise still further if the Iran conflict keeps squeezing oil and gas supplies.
Ms Kumar said the Chancellor was “right to resist the lure of short-term, unaffordable sticking plasters”, but she needed to seize this moment to make Britain more cost-competitive.
The BICS is a seven-year scheme to exempt businesses from paying two green levies and an energy-security charge. This could reduce their electricity costs by up to £40 per megawatt hour.
Scheme ‘does not go far enough’
To be eligible, factories must be in economically critical sectors. These include advanced manufacturing, clean energy, defence, digital technologies and life sciences. Suppliers to these sectors, such as makers of chemicals, steel or critical minerals, can also qualify.
Responding to a consultation on the BICS that ended in January, the Aluminium Federation said its members had “consistently reported that the proposed April 2027 implementation date is far too late”.
The Chemicals Industry Association told the Government that the scheme was not as generous as others in the EU, and “does not go far enough to make the UK a globally competitive manufacturing location”.
Other business groups supported the BICS but warned the government not to fund the scheme by increasing levies on companies that were not part of it.
Elexon, a company that provides data and settlement services to the energy industry, said getting BICS up and running by next April would be “very challenging”.
Its submission said the Government had to amend laws and build new processes and systems, and much of the groundwork for that would need to be finished by early this summer.
The Treasury declined to comment on speculation that Ms Reeves would this week announce an expansion of the BICS.
