Middle East tensions are sending oil prices soaring, fueling UK inflation and squeezing the new government’s finances. With oil hitting over $100 a barrel, NIESR warns inflation could climb to 3.8% and the UK may need an extra £24 billion to maintain public services. Economic growth is forecast to slow, costing £28 billion, while the UK faces the G7’s highest borrowing costs. Prime Minister Andy Burnham must fund ambitious social plans without adding debt — NIESR urges tax reforms or spending cuts instead, recommending tackling the £3 trillion national debt to build future resilience. Even if peace returns, inflation will persist, forcing hard choices on VAT, bus fares, and tax policy.
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