The wheels are coming off. Hard. The UK economy has officially contracted as the fallout from the Iran conflict slams into British shores. GDP figures out this morning show a sharp dip, worse than any Treasury forecast. This isn't a blip. It's a nosedive.
Sources in Threadneedle Street tell me the Bank of England is preparing emergency rate action. An emergency meeting is being called. Insiders say Governor Bailey is under immense pressure from Number 11. But the Chancellor is losing control. The war in Iran has spooked markets. Oil prices are soaring. Inflation is already back on the front foot.
Westminster is in full panic mode. The lobby is buzzing with whispers of a cabinet revolt. The Defence Secretary is briefing privately that the PM has no plan. The Foreign Office is scrambling. No one saw this coming. But the signs were there. The polls have been dire for months. Now the economic weather has turned lethal.
This is a defining moment for Sunak. If he can't steady the ship, the 1922 Committee will sharpen their knives. Backbenchers are already drafting letters. The mood is dark. The Treasury is briefing against the Bank, claiming they moved too slowly. But the Bank is blaming the Treasury for lack of fiscal headroom.
This is the game. And it's being played out in real time. Watch the gilt yields. Watch the pound. The next 48 hours will be brutal. The UK economy is contracting. The Iran war is the catalyst. But the damage was done long before. Now we pay.
