- The UK is predicted to face "stagflation" – a combination of rising inflation, higher unemployment and low economic growth – primarily due to escalating energy prices stemming from the Iran war.
- Thomas Pugh, chief economist at RSM UK, forecasts stagflation, attributing it to factors like a naval blockade of the Strait of Hormuz, which could significantly increase energy prices, leading to recession.
- Inflation, which hit 12.8 per cent in 2023, currently stands at 3.3 per cent, with predictions it could rise to 3.5-4.0 per cent by the end of the year.
- The Bank of England recently held interest rates at 3.75 per cent, having previously been expected to cut them multiple times this year, though some economists believe cuts could resume if the conflict is resolved by summer.
- While some economists, like Paul Dales of Capital Economics, anticipate economic stagnation rather than a deep recession, business leaders express concern over the Middle East uncertainties impacting general confidence.
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