The economic shock of the Iran war could lead to job losses in Britain over the course of the year, the Work and Pensions Secretary has warned.
Pat McFadden told Sky News the impact of the continued closure of the Strait of Hormuz, an important oil shipping route, could feed through to the labour market.
The blockage of the strait, through which a fifth of the world’s oil normally flows, has driven energy prices up across the world.
Mr McFadden said the economy had been “going in the right direction” at the start of the year, before the US-Israeli war with Iran began.
He added: “The latest unemployment figures for February showed a fall, interest rates were expected to come down, the markets were pricing in a couple of cuts during the course of the year.
“The truth is, with the effect of the Iran war, we can’t count on any of that at the moment. There is likely to be an effect on prices, which feeds through from energy costs, and there may well be labour market implications.”
Asked if this meant job losses, Mr McFadden replied: “Yes. It could happen.”
US President Donald Trump said overnight that America will pause efforts to guide stranded vessels out of the Strait of Hormuz, dubbed “Project Freedom”, in order to try and finalise a peace deal with Iran.
But he confirmed a US blockade of Iranian ports would remain in place while talks were held to end the war.
The announcement followed US secretary of state Marco Rubio’s insistence that a ceasefire in the region was holding after the initial military operation against Iran had concluded.
Mr Rubio told a White House press briefing on Tuesday that for peace to be achieved, Iran must agree to the president’s demands on its nuclear programme and to reopen the strait.
US defence secretary Pete Hegseth also repeated he expected the rest of the world “to step up”, and said Washington would hand over responsibility “at the appropriate time and soon”.
The White House has been deeply critical of the response by the UK and other allies to the Gulf crisis, insisting other nations needed the strait more than the US.
