Global economic fallout from the US-Israeli war on Iran deepens
The financial fallout from the US-Israeli war of aggression on Iran is sending ripples through the global economy, with experts warning of significant price hikes.
Reports published early on Monday brought a stark wake-up call for British markets. The FTSE 100 plummeted by nearly 200 points, a drop of roughly 2%. This downturn was mirrored across Europe, with Germany's DAX index suffering a 2.3% loss.
Esteemed economist Philippe Aghion said the conflict is projected to dampen worldwide economic expansion.
Aghion told RTL radio that a protracted conflict could usher in a period reminiscent of the 1973 oil crisis.
The Nobel laureate outlined a scenario where the fighting drags on for weeks, driving oil prices beyond $150 per barrel and triggering rampant inflation. Such a situation, he noted, would necessitate a unified economic response from Western nations, including the United States and Europe.
“An extended and broadening conflict will undoubtedly hinder global expansion,” Aghion warned.
Writing for the Al Jazeera news website, Richard Gaisford said the Bank of England may be compelled to increase interest rates to curb the expected surge in prices in response to the current market jitters. Such a move would have wide-reaching consequences, making loans more costly for corporations, homeowners, and the government itself.
The cost of UK government borrowing has already spiked dramatically since the war on Iran began. This escalation in bond yields adds another layer of complexity to the nation's fiscal management and day-to-day operations.
The United States and Israel launched an unprovoked war on Iran on February 28 by assassinating top Iranian officials and commanders in airstrikes and targeting the country's military and civilian infrastructure.
Iran has responded massively by attacking the Israeli regime and US military assets in regional countries, with the latter deeply affecting the production and transport of oil and natural gas in the region.
Iran has warned that the price of oil could reach historic records with a further escalation of the war, a scenario which could lead to reciprocal attacks on energy facilities in Iran and in the Persian Gulf.
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