Soaring energy prices following the US-Israeli conflict with Iran could trigger significant job losses in the UK, with over 100,000 positions at risk, according to a report in The Telegraph.
The price of oil has surged past $100 per barrel due to supply disruptions from the conflict, up from approximately $70 last month. Analysts warn that sustained high energy costs will force businesses to cut staff or freeze hiring to manage expenses.
James Smith, from investment bank ING, stated that if the disruption lasts around three months, unemployment in the UK could rise above 5.5%. This would worsen the current rate of 5.2%, the highest since the Covid-19 pandemic.
The UK’s economic position is particularly vulnerable. Fhaheen Khan, senior economist at Make UK, noted that British industrial energy costs are already among the highest in the developed world. Any prolonged increase in oil and gas prices would squeeze profit margins and reduce investment. He added that domestic demand in manufacturing has “collapsed” despite some sector growth earlier in the year.
Jordan Rochester of Mizuho Bank highlighted that the UK is now far weaker than during the initial phase-out of affordable Russian gas after the Ukraine invasion in 2022, when unemployment was 3.8%.
Public concern over the conflict’s economic impact is high. A YouGov poll published Monday found that over three-quarters of Britons believe the Middle East hostilities will negatively affect the UK and global economies long-term, with 64% expecting a hit to their household finances.
The situation underscores the UK’s exposure to global energy volatility and raises questions about the broader economic fallout from prolonged conflict in the Middle East.
