RE: Economic pressure10 Mar 2026 09:23
STP
“ We should all feel reassured that we are in such capable hands.”
It’s not looking good on the home front, the ME conflict has thrown a curve ball into your beloved ones mixing bowl and it isn’t looking rosy for a long time.
Glad you see that as a positive STP but the escalating conflict in the Middle East is widely expected to erode or potentially "wipe out" the Chancellor's £23.6 billion fiscal headroom.
10-year gilt yields jumped by 16 basis points shortly after the conflict intensified, directly increasing the cost of servicing government debt.
Economists at Capital Economics warn that if CPI inflation is just 0.5 percentage points higher than the OBR's 2.3% forecast due to energy shocks, headroom could drop to £16.5 billion.
The Markets have slashed the probability of a March rate cut from 80% to under 30%, with only one cut now expected in 2026.
Our UK wholesale gas prices hit a three-year high in early March 2026, threatening the OBR's assumption that energy costs would fall.
The OBR has already cut 2026 GDP growth forecasts to 1.1%(down from 1.4%), and further conflict could push this lower.
Unemployment is now forecast to peak at 5.3% in 2026-27, which will increase the bill for unemployment benefits and reduce tax receipts.
There is mounting pressure to increase defence spending, with some estimates suggesting a £27 billion requirement that would exceed all available headroom.
STP and Trouble will see this as attacking and being negative to the current incumbent in charge, but the truth is you can’t be in denial to bad news. I am sure Trouble will put a report in to get it removed like he does frequently.
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