UK faces £35bn hit and risk of recession this year over impact of Iran war, thinktank warns

Britain is facing a £35bn economic hit and the risk of a recession this year as the fallout from the Iran war adds to the pressure on Keir Starmer’s government, a leading thinktank has warned.The National Institute of Economic and Social Research (Niesr) said that even under a best-case scenario the UK economy would grow at a much slower pace this year and next because of the Middle East conflict.With households facing a rise in energy costs linked to the Iran war, the chancellor, Rachel Reeves, has said that “nothing is off the table” as the government considers options to provide a targeted and temporary support package.However, Britain’s oldest independent economic research institute said the government faced a multibillion-pound hole in the public finances amid a worsening inflation shock that would make it harder for Reeves to respond.David Aikman, the Niesr director, said: “This is a serious blow to the government’s mission to get the UK economy growing again

How the UAE’s decision to leave Opec could recast the Middle East

The United Arab Emirates’ decision to walk out of Opec is a political as much as business decision, and will reignite the simmering rows between the UAE and Saudi Arabia – which had been covered up by their shared anger with Iran over its attacks on the Gulf states since the start of the US-Israel war on Tehran.In the short term, leaving the oil producing cartel it joined in 1967 gives the UAE the freedom to respond quickly to a long-term prospect of constrained supplies, and to maximise profit. But it is a decision the UAE has considered before, as UAE and Saudi tensions over production quotas have been longstanding.But the timing and unilateral nature of the UAE decision shows how other intra-Gulf disputes over how to respond to the Iran war could recast the Middle East.The defection is, of course, a blow to Saudi Arabia’s prestige, since it positions the UAE as the Gulf state closest to Donald Trump, a long-term critic of Opec, and weakens the Saudis’ ability to manage the price of oil

Another shadow banking hit – but otherwise, Barclays looks fine

The Barclays boss CS Venkatakrishnan, having seen the bank hit in the space of six months by two high-profile blow-ups in the world of shadow banking, is pledging to take more care. “We are constraining lending to certain structured finance counterparties who operate more vulnerable business models and cannot convince us of the quality and independence of their financial controls,” he said.There’s an obvious response to that vow of greater vigilance: what were you doing previously? Wouldn’t it have been a good idea in the first place not to lend to high-risk outfits with unconvincing financial controls – for example, those with large mortgage exposures but small audit firms? There was, in other words, a sense in the chief executive’s comments of stable doors being shut rather too late.But here’s the other point about Barclays’ twin embarrassments: they are significant but not enormous in the grand scheme. The impairment charge in Tuesday’s first-quarter numbers for Market Financial Solutions (MFS), which collapsed in February amid allegations of fraud, was £228m

US gas prices surge to highest level in four years, averaging $4.18 a gallon

US gas prices rose to their highest level in four years on Thursday, reaching an average $4.18 a gallon at the pump as US-Israeli peace talks with Iran remain at a standstill.The last time average US gas prices breached $4.15 a gallon was in April 2022, when oil prices soared shortly after Russia invaded Ukraine. Average gas prices are now $1 higher than just a year ago, when they were closer to $3

UAE quits Opec in win for Trump as oil cartel weakened

The United Arab Emirates has quit the Opec oil cartel after 60 years of membership, in a heavy blow to the group and its de facto leader, Saudi Arabia, as global energy markets contend with the biggest supply crisis in history.The shock loss of the UAE, Opec’s third-largest oil producer, is expected to weaken the group, which for decades has worked together to use its collective oil production to influence global oil market prices.The UAE’s exit from Opec represents a win for Donald Trump, who has previously accused the organisation of “ripping off the rest of the world” by artificially inflating oil prices by holding back production.Last week Trump confirmed that the US had discussed extending a financial lifeline to the UAE under which the two countries’ central banks could agree to exchange equivalent amounts of each other’s currency should the Middle East crisis deepen.The UAE on Tuesday set out a plan to sever its ties to the cartel within days as the market enters the ninth week of the US-Israeli war on Iran – which has blocked a fifth of the world’s seaborne oil from flowing from Gulf producers through the strait of Hormuz, causing record oil market volatility

Singing activists disrupt NatWest meeting over ‘climate backtracking’

The chair of NatWest was forced to defend the bank against accusations of “climate backtracking” at a chaotic annual shareholder meeting, which was temporarily suspended owing to singing protesters.Not long after the meeting began in Edinburgh, it was adjourned for about half an hour after a protester interrupted Rick Haythornthwaite’s opening speech.Protesters in the audience, wearing black T-shirts emblazoned with “No more big oil” and “No bombs”, then sang a song to the tune of Frère Jacques, with a chorus of “No more bombs, no more oil”. They appear to represent the campaign group Extinction Rebellion’s XR Money Rebellion, which has targeted NatWest and other banks for financing fossil fuel projects.When the meeting resumed, it was dominated by questions from shareholders about NatWest’s climate policies, as well as staff wages compared with bumper executive pay packets