Trump’s re-election may have helped Albanese – but the US war in Iran is creating economic conundrums
Donald Trump’s re-election helped Anthony Albanese win a landslide election, but now threatens to derail his second term of government, with the Labor government’s fortunes increasingly tethered to the US president’s policy agenda.Trump’s Middle East incursion triggered a huge spike in energy costs, propelling oil prices to their highest level in four years, as fears of a prolonged regional conflict took hold.An elevated oil price is a major global inflation trigger, given it drives up costs across goods and services in the economy, pushing central banks, including in Australia, to consider rate hikes to keep a lid on inflation.The resurgence of Australian inflation, already a factor before the Middle East conflict, now risks intensifying, creating a problem for the incumbent government.Sign up: AU Breaking News emailIf interest rates move higher, as expected, many voters will be paying increased mortgage rates at the same time as they face elevated prices for everything from fuel to food.
This will make it awkward for Labor’s May budget and the broader second term agenda, given the government will be aiming for policy reform while battling a rearguard action against intensifying cost of living pressures.While Labor has signalled it will reduce spending at the upcoming budget, any policy that costs money will be criticised by opponents.If unemployment levels start to lift, Labor may not be able to meaningfully help without risking another inflation spike.These are classic cost-of-living conundrums.There are no easy answers, and the incumbent will face a backlash no matter what they do.
Many people will look to more populist politicians for solutions; a trend that is already happening among the unhappy electorate.As my colleagues wrote earlier this month, One Nation might not just be a Coalition problem.Consumer confidence is low in Australia, according to customer sentiment surveys run by the major banks, due in large part to inflation concerns.Fearful voters sometimes vote for incumbent stability, but they won’t if they blame the government for that insecurity.The question remains, however, whether the Coalition is strong enough, or One Nation viable enough, to take that vote from the government.
While many issues feed into an election result, it’s no coincidence the 2024 “graveyard for incumbents” – the US and UK governing parties among them – came shortly after, or during, surging inflation and associated living costs.Incumbents – including governments in Australia, Norway and Canada – fared better in 2025 after inflation settled.In politics, timing is everything.Shortly after the recent oil price surge, Trump calmed markets when he called the war on Iran a “short-term excursion”, raising investor hopes that oil supply would soon normalise.Putting the humanitarian fallout created by a fast exit strategy to one side, such a policy would ease immediate concerns of an oil crunch and aid the Australian government.
It’s unclear longer term, however, whether shipping volumes through the crucial strait of Hormuz would just bounce back, or if there would be added risk – and cost – for freight moving through the passage, fuelling global inflation,The link between Albanese’s prospects and Trump’s agenda won’t come as a surprise to Labor, given US policies had a measurable impact on Australia’s last election,Peter Dutton adopted part of the Republican blueprint – attacks on public service numbers, work-from-home scepticism and anti-woke rhetoric, to name a few – which worked until it didn’t,Trump’s “liberation day” tariffs, announced weeks before the Australian election, was a gift for Labor, with the Coalition’s Republican-tinged platform caught in the wash,While Trump may have inadvertently helped Albanese on that occasion, his Iran excursion won’t.
Middle East crisis could push UK inflation back up to 3%, says OBR
UK inflation could end the year higher than previously expected at 3% because of the US-Israel war in Iran, the government’s economics watchdog has said.David Miles, a senior figure at the Office for Budget Responsibility (OBR), said inflation could end the year a percentage point higher than expected before the war, because of the energy price shock triggered by the crisis in the Middle East.The oil price fell on Tuesday after rising above $100 a barrel on Sunday, but it is still significantly higher than before the US and Israel began bombing Iran just under a fortnight ago. A barrel of Brent crude was trading at $85 on Tuesday evening.Miles told the Commons Treasury committee that if current energy prices were sustained, the UK would face a “material, significant” increase in inflation, delivering a noticeable and unwelcome increase in living costs for British households
Pipeline of new drugs to fight superbugs is ‘worryingly thin’, experts warn
The pipeline of new drugs to fight superbugs remains “worryingly thin” and has shrunk by 35% in the last five years, experts have said, predicting the annual number of deaths linked to drug-resistant infections globally will double to 8 million by 2050.The number of antimicrobial projects from large pharma companies has shrunk by 35% over the past five years, from 92 to 60 medicines in development, according to a report from the Access to Medicine Foundation (AMF), a Netherlands-based non-profit group, backed by the Wellcome Trust. Only five medicines are in development for children under five, who are more vulnerable to infections.“Overall, the research and development pipeline remains worryingly thin, and industry investment has lost momentum,” said Jayasree K Iyer, the foundation’s chief executive. She described drug resistance as the biggest single threat to healthcare worldwide
Datacenters are becoming a target in warfare for the first time
Hello, and welcome to TechScape. I’m your host, Blake Montgomery. If you enjoy reading this newsletter, please forward it to someone you think would as well.Iran is bombing datacenters in the Persian Gulf to blow up symbols of the Gulf states’ technological alliance with the United States. Added bonus: they will be extremely costly to rebuild, being among the most expensive buildings in history
‘I wish I could push ChatGPT off a cliff’: professors scramble to save critical thinking in an age of AI
Lea Pao, a professor of literature at Stanford University, has been experimenting with ways to get her students to learn offline. She has them memorize poems, perform at recitation events, look at art in the real world.It’s an effort to reconnect them to the bodily experience of learning, she said, and to keep them from turning to artificial intelligence to do the work for them. “There’s no AI-proof anything,” Pao said. “Rather than policing it, I hope that their overall experiences in this class will show them that there’s a way out
Cheltenham festival 2026: Lossiemouth leaves rivals in wake to win Champion Hurdle – as it happened
Here’s Greg Wood’s report on day one, thanks for following today’s action and please join us tomorrow. We go again.No sooner had Lossiemouth lifted the roof off Cheltenham with a staggeringly dominant Champion Hurdle victory than the skies around Prestbury Park also began to brighten too. The buildup to the festival had been dominated by talk of civil war, of feuding and internecine conflict. But this was a reminder of the sport’s simple pleasures
Former Super Bowl champion asked ChatGPT about injuries before girlfriend’s death, court hears
Former New York Jets linebacker Darron Lee appeared in a Tennessee courtroom on Tuesday as prosecutors outlined evidence they say ties him to the killing of his girlfriend, including messages where he asked ChatGPT questions about injuries and how to handle an unresponsive person, according to Chattanooga’s CBS affiliate WDEF.Lee, 30, is charged with first-degree murder in the death of Gabriella Perpétuo at the couple’s home in Ooltewah, about 20 miles northeast of Chattanooga. Deputies were called to the residence last month for a reported medical emergency and found Perpétuo unconscious on the living room floor. The medics were unable to save her and WTVC NewsChannel 9 reported she had suffered a suspected stab wound in addition to other injuries.During a preliminary hearing in Hamilton County court, prosecutors introduced body-camera footage from deputies who responded to the scene
Farage delivers energy sermon at the pump – just don’t mention the war
Lammy defends jury reforms against claims they will worsen racial bias in legal system – as it happened
Nigel Farage accused of U-turn as he says UK should keep out of Iran war
Ministers to ask 100 UK citizens to advise on digital ID plans
So Badenoch, Farage and Blair think the Iran war is a great idea? Hmm … | John Crace
Ministers must act more quickly on deepfakes to protect women and girls, Kendall says