Bank of England rate-setter Megan Greene has warned of long-lasting damage to the global economy due to the war in the Middle East. The combination of damage to key energy facilities in the Gulf, the threat of future missile strikes, and the chance of future blockades of the Strait of Hormuz means energy prices are likely to remain elevated. Greene told an event hosted by investment bank Jefferies that it was “wildly optimistic” to assume supply would go back to normal in the next two months, adding: “There will be lasting implications from this even in the best-case scenario.” Inflationary impacts are likely to be felt more quickly because the economy and labour market are weaker than they were in 2022, Greene noted. European Central Bank president Christine Lagarde echoed that analysis saying businesses may be quicker to raise prices this time, adding that the central bank would not hesitate to act to curb inflation.

UK inflation remained unchanged at 3% in February, according to the Office for National Statistics (ONS). However, this figure does not reflect the recent surge in global energy prices due to the conflict in the Middle East. Luke Bartholomew, deputy chief economist at Aberdeen, said: “Today’s inflation report is little more than a relic of the world before the Iran conflict.” Economists warn inflation could exceed 5% later this year, significantly above the Bank of England’s 2% target.

The UK Government plans to simplify the re-domiciliation process for foreign companies, aiming to attract investment and enhance competitiveness with global finance hubs. Currently, firms face complex and costly procedures to relocate, which the Department for Business and Trade (DBT) deems unfeasible for many. The proposed regime would allow companies to change their registration without altering their legal identity. Minister for Economic Transformation Blair McDougall said: “This is a clear signal that the UK is open for business.” However, research indicates that demand may primarily come from multinationals restructuring rather than direct job creation.

Consumer confidence in the UK has reached an all-time low, according to the British Retail Consortium (BRC) survey conducted by Opinium. The survey, taken from March 10 to March 13, revealed a drop in consumer expectations for the economy to -53, down from -30 the previous month. Personal finance expectations also fell to -17 from -6. Spending predictions increased to +13 as consumers anticipate rising energy costs. The BRC said: “Consumer confidence collapsed as the conflict raised the prospect of higher inflation in the months ahead.” The decline was most significant among the ‘boomer’ generation.

House prices in London have decreased for the sixth month in a row, falling by 1.7% year-on-year as of January, according to the Office for National Statistics (ONS). The UK housing market is also struggling, with overall growth slowing to 1.3%. Paige Tao, economist at PwC, noted: “Further headwinds are building. Today’s figures come with an important caveat that they only capture activity up to January and do not yet reflect the impact of the Middle East tensions.” The outbreak of war in Iran has already prompted lenders to pull mortgage deals as inflationary pressures rise and markets scale back expectations of Bank of England rate cuts.

Next month, the relief rate for Inheritance Tax (IHT) on agricultural and business assets will drop from 100% to 50% for qualifying assets over £2.5m. Writing in City AM, Mark Goddard, CEO of Lombard Odier, warns that this change will significantly impact family businesses, which make up 93% of UK firms. He says: “The very businesses that benefit the UK’s economy are the ones that are most exposed to these IHT changes.” The policy shift may force business owners to make decisions based on tax implications rather than commercial viability, potentially harming the UK’s growth agenda.

Sir Rocco Forte, founder of Rocco Forte Hotels, expresses deep disillusionment with the UK’s current state, likening it to the 1970s. He cites damaging policies, particularly the impending inheritance tax changes, as threats to family-run businesses. Forte stated: “If I drop dead tomorrow…there’s no way my family can pay that tax without selling the business.” Despite these challenges, he remains focused on expanding his hotel empire internationally, with plans for new locations in Italy, while lamenting the UK’s declining soft power and poor international reputation.

The UK Government’s Making Tax Digital (MTD) initiative will require self-employed individuals and landlords earning over £50,000 to use commercial accounting software for tax reporting. Starting in April, this change affects around 865,000 people, with an estimated cost of £465 in the first year. Graeme Green argues in the Telegraph that the initiative compromises privacy by allowing third-party companies access to sensitive data. “If HMRC cannot guarantee people’s data security, the new system is clearly not ft for purpose and should be immediately abandoned,” he says.

Business leaders from firms like BT, Shell, M&S, and Pret have formed a new Employer Taskforce to address rising unemployment. The initiative, led by the Jobs Foundation, aims to support disadvantaged job seekers and improve hiring practices. M&S chief people officer Hayley Tatum noted that businesses possess the knowledge to help people enter the workforce “at scale.” The taskforce will also tackle youth unemployment, which has surged to 16%, and the increase in long-term sickness benefits since Covid.

New draft legislation will require employers with more than 250 staff to report any pay disparities between disabled and able-bodied staff and white employees and those from an ethnic minority.

After suffering losses from the collapse of UK property lender Market Financial Solution and US subprime auto company Tricolor Holdings, Barclays is pulling back from asset-based lending to smaller borrowers, Bloomberg reports. Instead, the bank will shift its focus to loans and securitisations for larger corporates.

Larry Fink, the CEO of Blackrock, has pointed to the need to reassess career perceptions as AI transforms the job market. In a BBC interview, he stated that skilled trades like plumbing and electrical work will gain importance, while some office roles may decline. Fink recently announced a $100m commitment to training programmes for skilled trades, aiming to support 50,000 workers over five years.