The UK economy has officially contracted. GDP fell by 0.3% in the last quarter. The Treasury is briefing the Lobby that this is just the beginning. The Iran war is biting hard. Oil prices have spiked. Supply chains are in chaos. The Chancellor is locked in emergency talks with the Bank of England. But the mood is grim. One Treasury source told me: “We are looking at a prolonged period of instability. No quick fixes.”
Westminster is on edge. Backbench MPs are getting nervous. The Prime Minister’s approval ratings are already in the toilet. This data point is a bomb. The 1922 Committee is stirring. There are whispers of a letter being drafted. No names yet. But the usual suspects are circling.
The opposition is smelling blood. Starmer’s team is already coordinating attacks. They will tie this to the government’s foreign policy. The narrative writes itself: reckless war, economic pain.
But here is the thing. The Treasury is not wrong. This is structural. The war has disrupted global trade. The UK is particularly exposed. Our reliance on imported energy is a vulnerability. The government’s energy security plan is in tatters. Renewables are not ready. Nuclear is delayed. The buffer is gone.
I am hearing that the OBR will revise down its growth forecasts next month. That is a political earthquake. It will give the Chancellor no room for pre-election giveaways. The fiscal headroom has evaporated.
Inside Number 10, the mood is described as “resolute but realistic”. No one is panicking. Yet. But the whips are paying close attention to the 2019 intake. Many of them are in marginal seats. They are scared.
The next few weeks will be brutal. The PM has to pass a tough budget. Austerity 2.0? That is the rumour. But it could fracture the party. The right wing is already demanding tax cuts. The moderates want spending. The Chancellor is caught in the middle.
One thing is certain: the easy politics of 2023 are over. The war has changed everything. The economy is the new defining issue. And the government is on the back foot.
I will be watching the markers. The next PMQs will be explosive. The trade unions are planning action. The business lobby is furious. This is a perfect storm.
Stay tuned. The lobby is buzzing. I will have more soon.
