11/04/2026 by Tony Redondo
Analysis from investment bank Stifel has piled further pressure on the Government to boost North Sea oil and gas production. Their data shows that tapping the UK’s own offshore gas reserves, rather than paying for imported LNG (Liquefied Natural Gas) shipments saved the country around £2.5 billion in 2025. The savings would be “substantially higher” this year, as prices have surged amid the Middle East conflict. Gas prices have soared by up to 56% since the war began, with the threat of strikes deterring tankers from passing through the Strait of Hormuz, through which a fifth of global gas exports normally flow.
This volatility is being felt acutely at the pump, where motorists are facing some of the highest prices in years. As of early April 2026, average petrol prices have climbed to approximately 154.7p per litre, while diesel has seen an even more dramatic spike, averaging 186.8p. In some areas, diesel has already breached the 190p mark, fuelled by a sharp rise in wholesale costs and a 45% jump in global oil prices since the outbreak of hostilities in late February.
https://bmmagazine.co.uk/news/uk-petrol-prices-ceasefire-iran-war
The findings increase scrutiny of Labour Energy Secretary Ed Miliband, who has banned new exploration in British waters and rejected calls to extract more fossil fuels from the North Sea in pursuit of his Net Zero agenda. The North Sea remains the UK’s biggest gas source, accounting for around 45% of supplies. A further 35% comes via pipeline from Norway, with the remaining 20% made up of LNG imports.
The independent, statutory body the Climate Change Committee has said Britain will still need oil and gas beyond 2050.
A Vulnerable Energy Position
Both the OECD (Organisation for Economic Co-operation and Development) and the IMF (International Monetary Fund) have warned that Britain will be the hardest hit among nations that import Gulf oil and gas.
Even the left-leaning New Statesman has cautioned about the price Britain will pay for years of energy policy that has left the country ill-prepared for supply shocks. Before the Iran conflict, Britain already faced an energy crisis, with the highest industrial energy prices in the G7 and among the highest domestic prices in the developed world. Large industrial closures and rising levels of energy-related bad debt were already alarming economists and business leaders alike.
Britain relies on gas for 35% of its total energy supply, with oil accounting for a similar share. The remainder comes from nuclear, a small and currently declining portion and renewables. Unlike Italy, Germany, Poland and China (which burns more than half of the world’s total coal), Britain has almost no coal to fall back on. The country is actively reducing existing North Sea production through a windfall tax, banning new gas licences, and at the margin importing US LNG, fracked gas that must be liquefied for shipping, making it considerably more environmentally damaging than domestically produced North Sea gas.
Britain needs to build infrastructure. Both cement and steel are fundamental but producing both is highly energy intensive, which means Britain’s soaring energy costs have brought the industry to its knees. Cement production in the UK has fallen to its lowest level since 1950 and Britain’s annual steel production has dwindled from 28m tonnes in 1970 to just 2.5m tonnes in 2025. We now import over two thirds of our steel.
Political and Financial Pressure Mounts
Chancellor Rachel Reeves has also faced criticism, accused of obstructing £17.5 billion in potential North Sea investment by delaying the removal of the controversial windfall tax. A spike in energy prices triggered by the Middle East crisis led Reeves to postpone plans to wind down the Energy Profits Levy, which is currently set to expire in 2030, a decision that angered the industry. Oil and gas companies say they have identified North Sea projects capable of delivering over a billion barrels of oil and gas by the end of the decade and told the Chancellor they were ready to proceed, but only if the windfall tax is scrapped early. One industry figure described the decision to delay the transition to an Oil and Gas Price Mechanism as “economic illiteracy on steroids.”
The Tony Blair Institute has also weighed in against the Government’s position. The TBI’s energy policy expert, Tone Langengen, said the Middle East crisis exposed “how vulnerable the UK remains” and criticised Miliband’s Net Zero drive as energy costs face intense scrutiny. The pressure has been compounded when OpenAI paused its Stargate infrastructure project in the UK, citing the high cost of energy. The data centre had been a centrepiece of the ‘Prosperity Deal’ signed by Prime Minister Starmer and President Trump. “We see huge potential for the UK’s AI future,” OpenAI said. “We continue to explore Stargate UK and will move forward when the right conditions, such as regulation and the cost of energy enable long-term infrastructure investment.”
Unions Warn of Electoral Consequences
Trade unions have also turned up the heat on Labour, warning the party risks paying a heavy price at the ballot box in next month’s local elections on 7 May over its refusal to back new North Sea drilling.
Sharon Graham, Unite’s general secretary, said, “The Government’s energy policies in both Westminster and Holyrood are putting jobs and energy security at risk. This is an act of self-harm, and Labour will certainly pay the price in the May elections. Voters can see that it is a big mistake to let go of one rope before we have hold of another.”
The GMB’s general secretary, Gary Smith, called the current Net Zero strategy “absolute madness” amid soaring energy bills, warning it would be “shameful” for Labour to repeat the economic damage inflicted on industrial communities in the 1980s.
One Bright Spot: Electric Vehicle Sales
Amid the gloom, the SMMT (Society of Motor Manufacturers and Traders) reported a record high number of electric car sales in March, with the broader new car market growing 6.6%, its strongest month since 2019. Battery electric vehicle registrations rose 24.2% year-on-year, plug-in hybrids jumped 46.9%, and hybrid electric vehicles grew by 7.3%.
https://www.mirror.co.uk/money/expert-tells-drivers-switch-no-36980456
Currency Exchange Rates Update
The Pound ended the week little changed against the Euro, up 0.21% but still 0.92% down in the last month.
The Pound enjoyed a better and much livelier week against the US Dollar, up 1.97% on the week, its second largest weekly gain of the year.
On Wednesday, the Pound hit its highest level against the Canadian Dollar since the 4th of February as oil prices slid sharply after the Iran War ceasefire was announced.
A number of client strategy notes out this week all point towards potential trouble ahead for the Pound because of the UK elections on 7 May. Both Citi and JP Morgan are advising their clients to buy the Euro short term as they expect the Pound to be negatively impacted by the outcome of the May elections saying, “the political situation is about to heat up with Rayner waiting in the wings.”
For now, the Middle East remains in the driving seat for markets, but UK domestic politics will become increasingly important as we count down to May’s local elections with any rise in political uncertainty likely to lead to headwinds for the Pound. Former Deputy Prime Minister Angela Rayner has this week committed to campaigning for Labour in the vote, which political analysts say will raise her profile. It is widely speculated she will lead the left-wing charge for the Labour Party’s leadership if Starmer does fall.
The markets remain nervous of Starmer but are much more anxious about the possibility of him being replaced by Rayner, judging a leftward shift in policy will diminish the country’s already vulnerable financial setup.
Economists at Nomura say the ECB (European Central Bank) will raise rates before the Bank of England does, which will add to the expected downward pressure on the Pound to Euro exchange rate.
In the coming week, the key economic data releases and significant events include:
Tuesday China Trade Balance
US PPI Inflation
IMF World Economic Outlook & Global Financial Stability reports
Wednesday France CPI Inflation
IMF Fiscal Monitor report
Thursday China GDP, Industrial Production & Retail Sales
UK GDP & Industrial Production
EU CPI Inflation
US Industrial Production
What’s in the news?
The OECD warned global economic growth faces mounting pressure from short-term uncertainties, including geopolitical tensions, and longer-term structural challenges such as weak productivity, underinvestment, skills shortages, and ageing populations. The OECD analysis suggests that AI could lift annual labour productivity growth by up to 1.2% across member countries over the next decade, depending on the speed of adoption.
Kristalina Georgieva, the IMF’s Managing Director, warned global policymakers that trade disruption across the Middle East over the last month would lead to lower growth and higher inflation and leave “scarring effects” on the global economy.
The IMF will update its economic forecasts next week, including the outlook for the UK economy which is predicted to suffer the worst impacts of the war later in the year after the energy price shock from higher oil and gas prices passes through into household bills from July.
UK
The OECD has urged Chancellor Rachel Reeves to launch a sweeping review of the UK tax system in order to improve growth prospects and boost investment, saying the UK economy suffered from distortions and loopholes in its tax system. Their main recommendation was to broaden the VAT base. The HMRC tax code has long been the bane of accountants, small businesses, entrepreneurs and other taxpayers for its complexities.
The OECD also criticised the government for conflicts of interest in dealings with business, which may touch on Labour’s recent scandals around Lord Mandelson and Labour Together as well as former MPs’ moves into the private sector that have raised eyebrows. The Paris-based think tank’s report said legally binding commitments to introduce liability for violations should be extended to post-public activities and during politicians’ term of appointment.
Bibby Financial Services reported that SMEs are turning to bad debt protection amid tough trading conditions. Their latest SME Confidence Tracker reveals that the average amount owed to SMEs in unpaid invoices has risen to £66,770, a 10% year-on-year increase. Meanwhile, 30% of SMEs reported writing off an average of nearly £30,000 due to customer insolvency or default. In response, demand for BDP (Bad Debt Protection) is surging. In 2025, 60% of Bibby’s new business prospects opted to include BDP as part of their funding package.
The latest YouGov poll, conducted for The Sunday Times and Sky News, shows support for Sir Keir Starmer’s Labour Party has dropped a further 2% to 16%, with the Tories in a clear second on 19% behind Reform on 24%. The Green Party has taken a knock in the latest survey, falling 3% to 16%, but is now neck and neck with Labour.
Good news
UK exports to the EU hit a record high in 2025 and are up 19% since 2016 with services exports growth of 54% suggesting Labour’s EU Reset is a political choice, not an economic necessity.
Figures from CoStar show central London office vacancy rates have fallen to a decade low of 11.5%, driven by strong demand in prime areas such as the City and West End. By contrast, outer London continues to lag, with vacancy rates at 37%, highlighting a growing divide in the market.
Not so good news
Andrew Bailey, the Governor of the Bank of England has warned that turmoil linked to the Iran war could expose vulnerabilities in the rapidly expanding $3 trillion private credit sector, warning that it remains largely untested under severe stress. Speaking in his capacity as chair of the Financial Stability Board, Bailey said Britain was already facing an “energy shock” and heightened volatility in debt markets, drawing parallels with the conditions that preceded the Great Financial Crash in 2008. Bailey cautioned that private credit (lending by non-bank institutions such as hedge funds and investment firms) operates in a “relatively opaque world” with limited regulatory oversight, increasing the risk that problems could spread quickly if confidence falters. The sector has expanded rapidly in recent years, rising from around $2 trillion in 2020 to $3 trillion today, according to data from Morgan Stanley. Unlike traditional banks, much of the private credit market operates outside the direct supervision of UK and US regulators and relies heavily on institutional investors. This has raised fears that a sudden loss of confidence could trigger rapid withdrawals and forced asset sales.
Construction firms are cutting jobs rapidly due to soaring inflation. S&P Global reported that the month-to-month inflation increase in March was the largest since data collection began in 1997.
The Bank of England’s latest Credit Conditions Survey reveals that secured lending defaults, including mortgages have risen to 6.2% in early 2026, the highest level since late 2024. Unsecured lending defaults hit 18.6% in the first quarter of 2026, their highest level since the last quarter of 2023. Karim Haji, Global and UK Head of Financial Services at KPMG, said, “Rising default rates show that underlying pressure is building. The impact of the prolonged conflict on fuel prices is adding new pressure on household finances, and the full impact of higher costs and mortgage rates is still feeding through.”
Second homeowners in Scotland are facing up to 500% increases in their council tax premiums after local authorities were handed powers to raise bills by uncapped amounts. The SNP-run Midlothian council raised the premium it charges second homeowners on the 1st of April, saying a graduated premium would be applied based on how long a property in Midlothian had been used as a second home, with those who had owned the property for more than three years facing the highest charges. It claimed that the policy would raise up to £200,000 and increase local housing supply, despite the fact there are only 35 second homes in the predominantly rural county south of Edinburgh. In Midlothian, second homes owned for less than two years would be taxed a 100% premium on their existing bill, rising to 300% for those owned between two and three years, and to 500% for any owned for more than three years. In England, a 100% cap applies, while in Wales, councils can raise the tax by up to 300%. Other Scottish councils have also agreed to increase their premiums after the uncapped powers came into force, but not to the same scale. In Edinburgh and the Scottish Highlands, a 300% premium has been introduced.
USA
The US added 178,000 jobs in March, much higher than the 60,000 new jobs expected and the unemployment rate declined from 4.44% to 4.26%. However, the labour force participation rate dropped to 61.9%, its lowest point since 1977 outside of the pandemic, meaning fewer working-age Americans are either employed or actively job-hunting.
The US inflation rate was already above the Federal Reserve’s target even before the Iran war caused energy prices to spike according to February’s personal consumption expenditures price index (the Fed’s preferred inflation gauge), at 2.8% year-over-year. Core PCE, which strips out food and energy, also matched expectations with a 3% annual increase. The report also shows consumer spending up 0.5% on the month, while personal income fell 0.1% compared to an expected spending rise of 0.6% and income up 0.4%. In March, inflation rose three times faster than in February as the war in Iran spiked fuel prices.
Separately, the Commerce Department reported that economic growth rose just 0.5% on a seasonally adjusted annualized rate in the fourth quarter of 2025, down from the prior reading of 0.7% and the initial estimate of 1.4%. The full-year growth rate held at 2.1%.
The latest University of Michigan survey shows consumer confidence plunging to a record low in April as fears mount over rising energy prices and the broader impact of the Iran war.
A Gallup poll shows that nearly six in 10 Americans think they pay too much in taxes, despite Trump’s 2025 tax bill. The share of US adults who think that their taxes are too high has remained consistent since 2023 during the Biden’s presidency. Just 37% now say their taxes are about right and 47% say the income tax they face this year is fair, near the record low from 1999. Trump’s 2025 law made permanent provisions from the 2017 law, while adding tax breaks for overtime pay and tips.
The Dow Jones Industrial Average recorded its best day in a year on Wednesday, closing more than 1,300 points higher on the Iran war ceasefire announcement.
The EU
The EU Economy Commissioner has warned the bloc will be hit by a “stagflationary shock” despite the US and Iran agreeing to a two-week ceasefire as the conflict has exposed Europe’s vulnerability. The continent imports most of its energy, while commercial shipments have also been upended by disruptions to global transit routes. HSBC in a client note said, “European economies are only at the beginning of their struggle.”
The EU will pay for millions of gallons of French wine to be turned into ethanol, as slumping demand and strong production create a vast wine glut. Global wine consumption is down and economic slowdowns and tariffs have hit affordability. French exports saw their lowest volume in 20 years last year. France has about 11% of the world’s vineyards, and Paris has paid farmers to uproot vines. The resulting ethanol will be used in industrial processes.
Portugal has reinforced its position as the EU’s biggest bicycle producer with exports reaching a new all-time high in 2025.
Others
Since the Iran war began, India, Philippines, and other Asian nations have intervened in the currency markets to defend their currencies. Asian currencies are under severe pressure, with the Rupee, Rupiah, and Philippine Peso hitting record lows; the Korean Won at a 17-year low, and the Japanese Yen at its lowest level against the US Dollar since July 2024.
China reported higher producer prices for the first time since 2022, alleviating fears of persistent deflation in the world’s second biggest economy but driving concerns of a global wave of inflation resulting from the Iran war.
The RBNZ kept NZ interest rates unchanged at 2.25%. Governor Anna Breman said the central bank was not presently close to raising rates and noted that the bank would have full forecasts available at its next meeting, due on 27 May.
In Abu Dhabi, a record 66 bn. Dirhams worth of property deals were concluded in the first quarter of 2026, up from 27 billion dirhams in the same period last year. Foreign buyers accounted for 8.3 billion dirhams of the total.
Stranger than fiction
The Artemis II crew are safely back on planet Earth after reaching the far side of the moon on Monday, the farthest any humans has ever travelled from our planet. The crew saw parts of the moon’s surface never before seen on their flyby, during which they were out of contact with mission control for about 40 minutes.
Neptune’s moon may have tilted the ice giant off balance. The solar system’s eighth (and outermost, since Pluto got demoted in 2006) planet is unusual. Its moon Triton orbits backwards, against the spin of the rest of the system. New research suggests that Triton was once a dwarf planet, captured by Neptune’s gravity; its orbit coincided with the planet’s wobble, slowly pushed it off true over billions of years.
Quote
Winston Churchill speaking on appeasing Nazi Germany in January 1940, “Each one hopes that if he feeds the crocodile enough, the crocodile will eat him last. All of them hope that the storm will pass before their turn comes to be devoured. But I fear, I fear greatly, the storm will not pass.”
