As the conflict in Iran and the Middle East develops, Brian Taylor looks at the economic consequences – and argues that we are beset by broader instability. 

While scrutinising persistently grim developments in the Middle East, my eyes were languidly drawn to comments from the Chancellor. 

She was, I noted, issuing a statement anent the January GDP figures for the UK.  These stats were, I learned further, unexpectedly poor, registering zero growth in the economy.  And the Chancellor’s response? 

“Our economic plan is the right one, but I know there is more to do. In an uncertain world, we are building a stronger and more secure economy by cutting the cost of living, cutting national debt and creating the conditions for growth to make all parts of the country better off.” 

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Familiar at all?  This is, pretty much, what Rachel Reeves has said every single time the growth prospects have stumbled to a halt somewhat short of the sunlit uplands. 

It is a formulaic commentary, deliberately devoid of any substantive content.  It is, by design, intended to offer nothing beyond vague reassurance.  Even the stated targets are left imprecise. 

I make no complaint.  Such is politics.  It is the job of governmental leaders to content disquieted voters and markets.  It is their job, when walloped in the face with a wet haddock, to declare their liking for fish. 

In addition, these are particularly difficult times.  The truly depressing thing about the Chancellor’s value-light piffle is that it is a commentary upon stats which were formed before the USA and Israel launched their attacks upon Iran. 

Economically, things have got worse since.  Notably worse.  Further, there is underlying tension and anxiety afflicting the global body politic. 

With regard to the Iran War, one might say: “If it were done when ‘tis done then ‘twere well it were done quickly.” 

But when will it be “done”?  When will it be over?  And, more substantively, is it at all clear that ending the immediate conflict in Iran will reintroduce stability? 

I would suggest not.  Mostly because this war is not an isolated event.  It is part of a pattern.  The imposition of power without precise objectives and paying little or no heed to international law. 

The immediate impact of the Iran War is, of course, upon the cowering, fearful populations of the region itself.  In Iran, in Lebanon, in other Gulf states.   

But the economic impact is global.  We are enduring an oil shock comparable to the challenge faced in the 1970s. 

I understand why the Chancellor and Prime Minister attempt to argue that Britain is relatively well placed to sustain such a shock.  It is part of standard reassurance – which, as a necessary tactic, I applaud. 

They say that Britain is “more resilient” now.  But that is largely an endeavour to pile more contumely upon their Tory predecessors.  It lacks substance, given the broader economic stats. 

Further, they point to endeavours to shift Britain away from reliance upon hydrocarbons and towards renewable energy.  But, again, that is very much a work in progress, both by the UK and Scottish governments. 

Soaring and volatile oil prices hit the UK consumer.  As does the determination of Iran’s new supreme leader to blockade the Strait of Hormuz as war leverage. 

That is because these events cause turmoil in global financial and trade markets.  We are not immune, whatever resilience we proclaim.  Again, I do not remotely blame the UK Government.  I comprehend their attempted response. 

It is also politically reasonable for the Chancellor’s opponents to chide.  To say that not enough is being done.  To advocate emergency aid to address cost of living concerns, as was done during the Covid pandemic. 

Specifically, there are demands for the Chancellor to end plans to hike fuel duty after the current freeze ends in September.  I understand that demand – and I also understand the Treasury’s hesitation, aware that circumstances may change tomorrow, let alone by the autumn. 

Whatever happens in Downing Street, problems in oil supply affect us all.  They push up transport costs – and thus the price of all commodities.  They affect farmers who need fertiliser stocks.  They affect communities dependent upon heating oil. 

The broad strain upon the economy affects interest rates, meaning anticipated UK cuts are less likely.  That pushes up mortgages. 

And they affect inflation, meaning that the Bank of England’s target of two per cent is unlikely to be attained by the end of this year.  That in itself is economically adverse.  Plus it may push up the cost of index-linked benefits. 

And what is the response of President Trump to this hike in oil prices, to this global instability attendant upon his actions (and those of others) in Iran? 

Pressed by sceptical journalists about spiking oil prices, he replied: “I have a plan for everything.  OK?  I have a plan for everything, you’ll be very happy.” 

Curiously, this vague declaration – drawn in equal part from Pangloss and King Lear – failed to placate the attendant press.  But it was all that was on offer.  

However, this broadbrush statement – or, more precisely, the President’s transient forecast of an early end to hostilities – appeared to quieten the volatile oil markets.  For a brief spell, before anxiety returned. 

To be clear, one can entirely understand America’s concerns about Iran.  The regime is oppressive and dictatorial.  It fosters and engenders terror at home and abroad.  It poses a real threat. 

But, once again, just what are the objectives of this significant military endeavour?  To forestall nuclear weapons in Iran?  To change the regime?  To obliterate Tehran and other cities? 

And will Donald Trump’s world-moulding ambitions end with Iran?  It would appear not, despite the distaste voiced by his political base for global interventions by US force. 

Contemplate his record.  He proudly lists the conflicts he has resolved, brushing off critics who say his narrative is flawed if not fictional in parts. 

His ambitions appear boundless.  Gaza and Israel, driven partly by domestic political pressures.  A malleable focus upon Ukraine, prompting complaints that he is over-compliant with Russia. 

And the other endeavours.  Venezuela.  Reshaping NATO – with an understandable desire to curb US costs and commitments.  Greenland.  More bizarrely still, his apparent aim to annexe Canada. 

Nothing, it seems, is beyond his global scope.  Which breeds uncertainty.  Which threatens the economy. 

Brian Taylor is a former political editor for BBC Scotland and a columnist for The Herald. He cherishes his family, the theatre - and Dundee United FC. 

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