Economy Grew 0.4% but Treasury Warns Iran War Threatens Growth
The confirmed 0.4 per cent growth in the second quarter was overshadowed today by Treasury warnings that the conflict with Iran could slow the economy to as little as 0.3 per cent next year. Officials cautioned that momentum was already fading, with the spring’s expansion flattered by warm weather and a summer spending lift. Higher energy prices from the standoff are the main threat.
The forward-looking gloom took some shine off a figure the government had hoped to celebrate, and it reflects how exposed Britain remains to an oil shock it cannot control. With the Strait of Hormuz shut and crude volatile, the Treasury fears a renewed spike in energy costs would squeeze households and businesses just as growth cools. That would complicate the autumn budget, leaving the Chancellor little room to loosen the purse strings without borrowing more. The 0.4 per cent quarter shows the economy is not stalling, but the warning signals that the second half of the year could be far tougher. Watch how the budget is framed and whether the Iran standoff eases.