Trump getting US involved in Iran war could mean conflict lasts for YEARS, experts warn, and "devastating" for the UK economy
Donald Trump getting involved in the war between Israel and Iran could mean the conflict lasts for years and be “devastating” for the UK's economy, experts have warned.
US President Trump is weighing up whether to hit Iran with airstrikes on behalf of Israel - reports suggest he may have already decided to strike the country in the next few days.
Iran's Ayatollah Ali Khamenei has defiantly said Tehran will never surrender despite the threats.
Newspage spoke to experts on what impact Trump and the US having a direct involvement in the war would have and what effect it would have on the UK's economy.
Faisal Sheikh, Managing Director at Monmouth Capital, said “we should prepare for this conflict to go on for years”.
He added: "Any notion that Iran will ‘unconditionally surrender’ any time soon is misguided. This is a country with its roots in an ancient civilisation; as recently as the 1980s, it fought a brutal war to a standstill with Iraq. Iran has adapted to crippling sanctions, effectively cutting it off from Western economies.
“Much of its population may despise its authoritarian rulers, but right now every Iranian will be rallying to the cause, just as any of us would be if a neighbouring country attacked us.”
John Woolfitt, Director at Atlantic Capital Markets, said a prolonged conflict would have a serious impact on the UK economy and potentially result in higher taxes or spending cuts.
He said: “The first impact would be a spike in global oil prices, and the spike would likely hold as long as the conflict continues. The cost of oil jumping translates to higher fuel, transport and heating costs, reigniting inflation pressures and creating a headache for the Bank of England.
"If the conflict carries on for a longer duration then we would also begin to see supply chains come under pressure as global shipping routes could be disrupted, pushing up prices for imported goods. This would then be compounded in the UK as it could drive investors towards safe haven currencies like the dollar, putting pressure on the Pound.
“If a wider war continued, it would likely prompt the UK to raise defence spending, possibly above the NATO 2% GDP target. This could lead to higher borrowing, higher taxes or spending cuts elsewhere. War-linked inflation and economic stagnation could add pressure to the cost-of-living crisis.”
Rob Peters, Principal at Simple Fast Mortgage, said the “economic damage could get real, fast”.
He continued: “If the US gets involved in a wider conflict with Iran, the most immediate and obvious consequence is a sharp spike in oil prices, which would hit UK consumers at the pump and feed directly into headline inflation.
“But beyond energy, the impact will depend on how far and how long the conflict goes. If it’s a brief intervention, markets may absorb it. Although the UK's exposure to Iran is limited, if there’s wider escalation in the Middle East, we could see supply chain disruptions, a surge in market volatility and ultimately a hit to UK business and investor confidence.”
Kundan Bhaduri, Entrepreneur at The Kushman Group, said Brits will “feel it in our wallets” if Trump launches strikes on Iran.
He added: “With 20% of global oil flowing through the Strait of Hormuz, one Iranian missile could send Brent crude soaring past $120, driving up fuel, transport and food costs overnight. Inflation would surge again, just as we'd started to get it under control.
"SMEs already squeezed by high wages and cautious consumers would be hit hardest. Markets would panic, the pound would sink and lenders would tighten the taps. Add in cyber-attacks, Iran’s speciality, and everything from power networks to payment systems is suddenly at risk.
"After 2008, we swore we’d never sleepwalk into another crisis. So why does this feel like déjà vu in desert camouflage?”
Pete Mugleston, Mortgage Advisor & Managing Director at Online Mortgage Advisor, said it would be “devastating for the global economy”:
He said: “Aside from the obvious impact of oil prices rising, which could lead to a spike in inflation, a big consequence is if Iran decides to block the Strait of Hormuz. If this happened, it would have far-reaching implications for the global economy.
"20% of the world's oil consumption passes through the strait, and given that it's only 21 miles wide at its narrowest point, the impact could be huge with oil prices surging and a likely knock-on effect for supply chains. This move would likely result in a response from the US and its allies, risking an escalation in the war, which would be devastating for the global economy.”
Tony Redondo, Founder at Cosmos Currency Exchange, continued that it was “another step on the road to stagflation”.
He added: "The UK economy has enough problems of its own making, without having to contend with the serious fallout from a US-Iran war. The UK economy would be hard hit. Brent oil prices could hit $80–$100/barrel, adding 7p/litre at the pumps.
"Iran supplies 3% of global oil, and 20% of global oil sails through the Strait of Hormuz. Even if the US and OPEC increase supply to cap oil price spikes, the UK, having effectively shut down our own North Sea oil and gas production, leaves us energy import reliant, amplifying supply and cost risks.
"CPI inflation could rise from the present 3.4% to 4.5%, delaying Bank of England rate cuts, curbing growth by up to 1.4%. Higher shipping and import costs will squeeze UK firms further, and both business and consumer confidence will sink. The impact on the UK economy could be savage."
