Fears are growing that the UK could slide into recession after the outbreak of war with Iran triggered a sharp surge in global oil prices.
New figures from the Office for National Statistics show that the UK economy recorded zero growth in January, dealing a setback to Rachel Reeves and highlighting the fragile state of the economy even before the current geopolitical turmoil.
The data covers the period before the conflict between the US and Iran began, a crisis that has since caused what the International Energy Agency described as the largest disruption to oil supplies in history.
Economists warn that the shock to energy markets could now tip the UK economy into recession. Rising oil prices risk driving inflation higher while simultaneously slowing economic growth — a combination that raises concerns about stagflation.
Tomasz Wieladek said the UK has already been one of the weakest-performing advanced economies in recent months.
He warned that the oil shock is likely to worsen the situation, potentially increasing unemployment and dragging down GDP growth. According to Wieladek, the risk of stagflation is now “just around the corner”.
Oil prices climbed again on Friday, with Brent crude trading above $101 a barrel despite Donald Trump moving to temporarily lift sanctions on Russian oil.
The decision has raised concerns that Vladimir Putin could benefit from the elevated energy prices, generating additional revenue that may help fund Russia’s ongoing war in Ukraine.
