The whole world has watched the combat between the US and Iran unfold over the past few weeks. This war has affected the economic situation of many countries. One such country is the UK where a national emergency meeting has been called for Monday, March 23, to discuss the situation. The UK’s government is borrowing at their highest level since the 2008 financial crisis. The economic situation is only getting worse as threats are exchanged between the US and Iran. Iran has threatened to attack the water and energy systems of surrounding countries if the US attacks Iran’s energy grid. The UK is facing higher and higher prices since they rely on exported natural gas and fuel. This, along with other economic difficulties, is pushing down the value of British bonds.
In the upcoming meeting, the issue of how to react to these challenges will be discussed. The Finance Minister has already stated that she believes it is too soon to know what the impact of the war will be and is resisting major actions. The Housing Minister is voicing concerns about “profiteering” from fuel companies and would like to discuss ways to fight this.
Britain has been facing difficulties with inflation, and the shock to the energy market caused by this war is making this problem far worse. Some economists project that the inflation rate could reach 5% this year. Just last week the government issued a support package to help households whose heat runs on oil. It is now expected that the Bank of England will raise interest rates due to the war (they were projected to make cuts before the conflict). The government is in a difficult position as inflation rises but many call for increased governmental support.
The recent conflict may be mainly between the US and Iran, but its effects are worldwide. This article only looks at the UK but these effects are being felt throughout the world and are an important aspect of this war which must be considered.
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