Economic impacts of the Iran war will be felt for at least eight months after the conflict ends, the government’s Chief Secretary to the Prime Minister has warned, as he blamed Donald Trump for triggering the crisis that has sent energy and food prices soaring.
Minister warns of ‘long tail’ of economic pain
Darren Jones, the Chief Secretary to the Treasury, told the BBC that households should expect higher energy, food and flight prices “as a consequence of what Donald Trump has done in the Middle East”. He said the economic disruption would not end quickly, adding: “I think our best guess is eight-plus months from the point of resolution that you’ll see economic impacts coming through the system.”
Jones explicitly pinned responsibility on the former US president, stating there would be a “long tail from this”. The warning came as the government intensified its response to the closure of the Strait of Hormuz, a critical shipping lane that carries roughly one-fifth of the world’s oil and gas supplies. The International Energy Agency has described the disruption as the “biggest crisis in history” for global energy markets, with Brent crude oil prices surging and liquefied natural gas (LNG) prices also rising sharply. Damage to LNG facilities in Qatar is expected to crimp global natural gas supplies for two years, with repair timelines potentially stretching to five years, compounding the supply shock.
The conflict, which began at the end of February, has already triggered a sharp increase in oil and gas prices. That rise has cascaded through the economy: the Bank of England’s latest Financial Stability Report warned that around 1.3 million more UK households face a jump in their mortgage costs as a direct result of the economic shock, and described the UK economic outlook as “deteriorated”. Inflation has risen, driven largely by higher motor fuel prices, and economists predict it could reach 4%. The average two-year fixed-rate mortgage has increased significantly since the start of March, with further rises anticipated.
Government ramps up contingency planning
Prime Minister Keir Starmer will chair another meeting of the Cabinet’s Middle East Response Committee on Tuesday, following a session last week. A separate contingency planning group of ministers, led by Darren Jones, is meeting twice a week to monitor stock levels and assess plans for addressing supply chain disruption. Jones said the government is focused on “what can we do within our power to help people to get through those difficult times”.
Mitigation measures under consideration include support for fuel and energy costs, securing CO₂ supplies — for example by reactivating the Ensus bioethanol plant — and working with international partners to reopen the Strait of Hormuz and stabilise markets. The government is also exploring ways to weaken the link between electricity and gas prices to protect consumers. Ministers have urged the public to maintain normal purchasing habits, with no current fuel shortages reported. Drivers have been told to keep filling up as usual and not to change travel plans, despite growing fears over potential jet fuel shortages that could disrupt summer travel. Europe, which sources a significant portion of its jet fuel from the Middle East, is considered particularly vulnerable.
But Jones conceded that consumers are more likely to see price increases than empty shelves. “Quite frankly, that’s probably going to come online, not just in the next few weeks, but the next few months,” he said. The government’s contingency planning is underpinned by a confidential exercise codenamed “Turnstone”, run by the Cobra emergency committee, which explored a “reasonable worst-case scenario” based on the Strait of Hormuz remaining closed and no peace deal being reached.
CO₂ shortage threatens food supply chains
Leaked government documents from Exercise Turnstone warned that supplies of carbon dioxide could fall to just 18 per cent of current levels. That dramatic reduction is based on a key UK plant suffering a mechanical error combined with high gas costs leading to a fall in production of ammonia and fertiliser across Europe — processes that produce CO₂ as a by-product. The UK has experienced CO₂ shortages before, notably in the summer of 2018 and again in September 2021, but the current crisis threatens to be far more severe.
CO₂ is essential across multiple industries. It is used to extend the shelf life of foods such as salad, packaged meats and baked goods; it carbonates drinks; and it is required for the humane slaughter of livestock. Breweries and the healthcare sector also rely on CO₂. The shortage is exacerbated by the shutdown of ammonia production facilities due to soaring energy costs, and the conflict has also disrupted the supply of urea, a key nitrogen-based fertiliser, leading to further price increases.
The farming and hospitality sectors are expected to be the worst-hit by a CO₂ shortfall. Supermarkets said they are working with the government to plan for a worst-case scenario in which food producers are impacted. Food inflation is already predicted to reach up to 9% by the end of 2026. The knock-on effects extend beyond food: construction materials face indirect impacts, including price volatility and delays caused by rerouted shipping.
Public concern is running high. A poll found that 87% of Britons are worried about the personal impact of the Strait of Hormuz closure on the cost of food and other goods. Half of the population believes the government is doing a “bad job” at limiting the effect of price rises, and some behavioural shifts have already emerged, including increased use of public transport and a preference for UK-based holidays. The conflict has been compared to the 1970s energy crisis, with the Strait of Hormuz closure described as the largest supply disruption in the history of the global oil market.
