The Prime Minister is facing mounting pressure today as a sharp escalation in the Iran conflict sends energy prices spiraling. Brent crude surged past $95 a barrel overnight, and UK wholesale gas prices jumped 12 per cent in early trading. For households already grappling with stubborn inflation, this is the last thing they needed.
The market is pricing in a sustained period of elevated costs. That means the energy price cap, already set to rise in October, could climb even further. The Treasury is reportedly scrambling to assess the fiscal fallout, but options are limited.
Any subsidy would blow a hole in the Chancellor’s already fragile fiscal rules. Meanwhile, gilt yields are creeping higher as investors demand a risk premium for UK sovereign debt. Capital flight is a real concern if the situation deteriorates.
The PM’s speech from the dispatch box later today will be watched closely. But with markets in a sell-off and consumers bracing for another hit, the window for political manoeuvre is narrowing fast.
