Higher energy prices caused by the Iran war will push the rate of inflation to an average of 3.2% this year up from 2.2% in 2025, according to a forecast from the Economic and Research Institute (ESRI).<\/p>\n
But it said a more prolonged conflict in the Middle East with higher energy costs would lead to “price rises across a wide range of goods and services”.<\/p>\n
It added that higher inflation would dampen economic activity.<\/p>\n
The ESRI said the domestic economy would grow at a slower pace of 2.1% this year, down from 4.9% last year.<\/p>\n
On the cuts to taxes on energy introduced by the Government this week, the ESRI said the excise reduction was not targeted at the less well-off, but the extension of the fuel allowance was focused on the most needy.<\/p>\n
ESRI research professor Alan Barrett said the greater gains from untargeted measures generally went to more wealthy households due to their “bigger cars and bigger houses”.<\/p>\n
He added past research showed untargeted measures resulted in 50% of the cost of the measure going to the top 40% of households by income.<\/p>\n
“If you start having policies that direct money to higher income people it reduces your capacity to insulate those on the bottom,” he added.<\/p>\n
On housing, the independent think tank said 37,400 homes would be built in 2026, rising to approximately 38,000 next year.<\/p>\n
“It is well understood that annual completions need to be approaching 50,000 units if national housing targets are to be met,” the ESRI said.<\/p>\n
The Government has set a target of building 300,000 homes between 2025 and the end of 2030.<\/p>\n
But the ESRI said: “It is difficult to see further upward momentum in housing output.”<\/p>\n
It also warned that construction inflation caused by the Iran war could also hamper the building of new homes.<\/p>\n
The organisation has also raised concerns about the capacity of the economy to deliver on “so many infrastructure needs in a limited time-frame”, adding that the Government needs to prioritise.<\/p>\n
“This point becomes more important if the Iran crisis leads to construction inflation,” it added.<\/p>\n","protected":false},"excerpt":{"rendered":"Higher energy prices caused by the Iran war will push the rate of inflation to an average of…\n","protected":false},"author":2,"featured_media":494628,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":["post-494627","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/494627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=494627"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/494627\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/494628"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=494627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=494627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=494627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}