The conflict in Iran could push unemployment in the United Kingdom sharply higher, with economists warning that more than 100,000 additional people may lose their jobs within months. Analysts say a prolonged war would drive up energy prices, disrupt supply chains and delay expected interest rate cuts, placing further strain on businesses and households.

Unemployment is already at 5.2 per cent, the highest level since the pandemic, and could rise above 5.5 per cent if the conflict lasts for several months. That would bring the total number of people out of work close to two million. Higher oil prices, which have surged above 100 dollars per barrel, are expected to increase costs for companies that rely heavily on imported energy, leading to job cuts and hiring freezes.

Manufacturers report collapsing demand and rising expenses, while household confidence has fallen to a 14-month low. Recent data showed the economy recorded zero growth in January, highlighting its fragility even before the conflict began. Economists warn that rising inflation combined with weak growth could create a period of stagflation, complicating decisions for the Bank of England as it weighs whether to hold or raise interest rates.