Extraordinary advice from International Energy Agency highlights impact of Iran war: The Yorkshire Post says
Official Government advice may be to carry on “in normal fashion” but the fact that the International Energy Agency has suggested people globally increase working from home, avoid air travel and drive at reduced speeds demonstrates the seriousness of the economic fallout to the ongoing Iranian war.
With the key shipping lane the Strait of Hormuz effectively blockaded and strikes on oil facilities this week, the IEA says the conflict had triggered “the largest supply disruption in the history of the global oil market”.
The UK Government has highlighted the country’s “diverse and resilient” supplies and played down the prospect of fuel rationing. But there is an undoubted economic reckoning heading our way – with no easy answers likely to be available to Chancellor Rachel Reeves.
While in the days of Covid and the aftermath of Russia’s invasion of Ukraine, vast public spending policies helping cushion the blow on households from global economic shocks, playing the same card again for the third time in six years is unlikely to be simple.
Government borrowing costs hit their highest level since the 2008 financial crisis on Friday as worse-than-expected public finance data compounded a gilt sell-off due to soaring inflation and rising interest rates.
Experts have cautioned the rising gilts yields will leave Ms Reeves will little firepower to protect households from the impending energy bill shock caused by the war and facing “difficult decisions” in the autumn budget unless hostilities end quickly.
The situation should also give pause to those within Labour lining themselves up as potential successors to Keir Starmer – calls for more borrowing and spending may sound like vote-winners but are likely to collide with economic reality.