The Bank of England has struck a sombre note this morning, warning that the UK's fragile economic recovery could be derailed by the escalating conflict in Iran. While the economy has shown surprising resilience in recent months, the governor cautioned that rising oil prices and supply chain disruptions risk pushing inflation back up and squeezing household budgets.
New figures released alongside the Bank's quarterly report show GDP growth of 0.3% for the last quarter, beating forecasts. But the headline number masks a stark north-south divide. In my own patch, the industrial north, factories are running at half capacity as export orders dry up. The price of a loaf of bread has jumped 12p in the last fortnight alone, and hauliers are warning that diesel costs could force them off the road.
Union leaders are already sharpening their pencils. The RMT has announced a fresh ballot for rail strikes, citing the cost of living crisis. Meanwhile, Unite is threatening action at oil refineries if pay talks break down. The Bank's own analysis suggests that a sustained oil price spike could wipe out the modest wage gains workers have clawed back over the past year.
At Westminster, the chancellor is under pressure to announce emergency support. But with public borrowing already high, the fiscal headroom is thin. The Bank's warning is clear: the road to recovery is paved with peril, and the next few weeks will be critical for millions of families already counting every penny.
