Trump says trade was key topic in talks with Modi

• Energy shock linked to Iran conflict may shrink UK economy by £35bn
• Recession risk grows if oil prices spike further
• Interest rates expected to rise as inflation pressures build

The UK economy is staring at a potential £35bn setback, with recession fears building as the Iran conflict drives up energy prices and inflation. Fresh warnings from the National Institute of Economic and Social Research suggest the fallout could slow growth sharply and leave households and businesses under renewed financial strain. The energy crisis linked to the Iran conflict has become a central concern, with inflation pressures and rising borrowing costs threatening to reshape the UK’s economic outlook.

Brent crude has already climbed to around £89 ($111) a barrel, and in a more severe scenario, it could reach £112 ($140). That kind of increase could push inflation above 5 per cent, significantly higher than earlier expectations, and force stronger intervention from the Bank of England. The knock-on effect could be a slowdown in economic activity, with some forecasts suggesting the risk of a recession in the latter half of the year if pressures continue to build.