This adds up to a total of \u00a370.4bn that will be wiped off UK households\u2019 real disposable incomes by the Middle East conflict, according to the CEBR, an economic consultancy.<\/p>\n
The economic shock from the closure of the Strait of Hormuz hits UK households through two channels. \u201cThe first is direct: higher energy costs feed straight into bills and into the price of almost everything else, so each pound of pay buys less,\u201d explained the CEBR senior economist, Liam Daly.<\/p>\n
\u201cThe indirect channel is slower but as important, running through monetary policy and the labour market.\u201d<\/p>\n
Before the Iran war began, the Bank of England had been expected to cut interest rates<\/a> this year. Instead, borrowing costs have been left unchanged, with City traders expecting one rate rise by December.<\/p>\n The squeeze on real incomes from higher energy costs and steady interest rates will hit household spending power, hurting economic growth.<\/p>\n \u201cA conflict fought thousands of miles away continues to bear on UK households, with real income erosion felt in the weekly shop, at the pump and on the energy bill. Until energy markets calm, the squeeze will persist,\u201d Daly said.<\/p>\n
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