Rachel Reeves has insisted “all options” are being considered after former prime minister Rishi Sunak urged the Government to help Ukraine by seizing frozen Russian assets.
Mr Sunak said the decision by the United States to pause and review its assistance to Kyiv highlighted further the need for Europe to find “considerably more resources” for Ukraine.
Chancellor Ms Reeves said it is “incredibly complicated” to take further action in line with international law but added Russia should “pay for the damage that Russia has caused”.
MPs have pressed for the UK and its European allies to seize Russian assets worth some 300 billion US dollars, which have been frozen across the continent, to assist Ukraine with its war and rebuilding efforts.
Germany and France meanwhile have reportedly started discussions of how 200 billion euros (£165 billion) of frozen Russian assets could be used as a way to hold Moscow to a potential ceasefire deal.
Speaking at Treasury questions, Conservative MP Mr Sunak told the House of Commons: “Events overnight make it even clearer that Europe must find considerably more resources for Ukraine.
“The Chancellor has rightly continued our policy of using the interest on frozen Russian state assets to benefit Ukraine, but I believe now is the moment to go further and to actually seize those assets.
“Russia’s invasion of Ukraine violates the principle of sovereign equality providing a basis in international law for this and by acting in concert with our allies we can ensure there are no risks to financial stability.
“So can I urge the Chancellor to push for co-ordinated action to seize those frozen Russian state assets, give that money to the Ukrainians so that they can defend their country and rebuild it too?”
Ms Reeves replied: “Last week we expanded the sanctions on Russia, including looking at the financial services. This week we’ve both signed off a UK EF (export finance) package to provide more military support above and beyond our defence spending, as well as that loan repaid by the profits of those assets.
“As the Prime Minister said yesterday, we would look at going further but as (Mr Sunak) knows it is incredibly complicated to do that in line with international law, but we keep all options on the table because (Mr Sunak) is absolutely right, Russia should pay for the damage that Russia has caused.”
A White House official said the US was “pausing and reviewing” aid to Ukraine to “ensure that it is contributing to a solution”.
It comes days after a heated clash between US President Donald Trump and Ukraine President Volodymyr Zelensky.