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Iran shock puts Starmer’s economic comeback on ice
- UK faces renewed inflation and borrowing costs as the Iran conflict shakes energy markets, prompting a COBRA session.
- Britain’s inflation is expected to be around 3.5% by summer, forcing central bank recalibration of forecasts.
- Market stresstightens as energy imports and debt service costs rise, complicating Reeves’ budget arithmetic.
- Labour debates how to shield households, signaling potential, but cautious, policy action ahead of local elections.
- Reeves is set to outline measures to protect households from price rises, including anti-profiteering steps.
- Labour presence hints at a split over fiscal rules if prices stay elevated and a larger relief package is needed.
- Energy cap expiration in July could trigger a significant bill increase for households.
- Finance ministry signals ongoing assessment of options to shield bill-payers while maintaining fiscal discipline.
- Analysts warn the growth outlook could worsen through 2026, limiting government leeway.
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