The UK's economic growth took a £1.3 billion hit in April as the Iran war sent energy prices soaring, with the GDP contracting 0.1%. This unexpected downturn comes after a 3% surge in March, largely driven by a bounce back from a sluggish start to the year. The Strait of Hormuz closure has resulted in an unprecedented 10% hike in global oil prices, directly impacting UK consumers and businesses alike.
According to Office for National Statistics (ONS) data, the decline in economic growth was predominantly due to higher energy costs, which accounted for approximately £600 million of the £1.3 billion contraction. This significant impact on household finances is set to be exacerbated by inflationary pressures, as consumers face increased fuel bills and potentially higher prices across various sectors.
The Foreign Office has issued a travel warning advising against non-essential visits to Iran due to heightened risks of terrorism and kidnapping. The UK Government's efforts to mitigate the conflict's impact on the economy are ongoing, but its complex nature means that challenges lie ahead in resolving this situation.