Economist David Lubin warned that the ongoing closure of the Strait of Hormuz could force the UK Labour government to slash public spending, as Britain faces heightened exposure to the global fallout of the Iran war. Lubin, a senior research fellow at Chatham House, told Daily Mail correspondent Chris Pleasance that the longer the strait stays blocked, the harsher the shock to the world economy will become.

Strait of Hormuz closure could force Labour spending cuts

Lubin argued that Britain’s economy,already described as "really unhealthy" with sticky inflation and decades of weak growth, may have little choice but to curb public expenditure if the Hormuz blockage persists. He warned that further tax hikes could trigger a "catastrophic decline in economic activity," leaving the government to consider limiting spending growth or outright cuts. "It may well be that UK political debate is forced into acknowledging the need for public expenditure control," he said, emphasizing the political difficulty of such a shift.

Lubin predicts stagflation without a Trump‑Iran deal

The economist warned that if former President Donald Trump fails to secure a rapid deal with Iran,the world could slide into severe stagflation – a combination of soaring inflation and stagnant growth. He noted that wealthy economies have so far been insulated by oil stockpiles and alternative pipelines, but that insulation is wearing thin as the crisis drags on. "If the Strait of Hormuz remains closed, the shock will worsen for the global economy," Lubin told Pleasance.

Ofgem announces 13% rise in energy bills, ading pressure on households

British households felt the impact of the crisis yesterday when energy regulator Ofgem revealed a 13% increase in bills from July, amounting to an extra £221 per year for a typical home. lubin highlighted this as a tangible sign of the UK’s vulnerability , linking higher consumer costs to the broader macroeconomic strain caused by the war.

Potential fuel rationing if the crisis deepens

Looking beyond immediate fiscal concerns, Lubin warned that prolonged disruption could force governments to consider fuel rationing to manage dwindling supplies. He suggested that employers might ask staff to work from home, reduce thermostat settings, and limit air‑conditioning as energy conservation measures. even if the strait reopens quickly, Lubin cautioned that oil output would take time to recover, keeping prices elevated for the foreseeable future.

Will the UK adopt spending cuts or tax hikes?

The key unanswered question is which fiscal path Britain will choose: deep spending cuts, higher taxes, or increased borrowing. Lubin noted that the political backdrop is denting investor confidence, making any decision fraught with risk. As of now, the government has not signaled a clear strategy, leaving markets to speculate on the next move.

According to the Daily Mail report, Lubin’s analysis underscores how the Hormuz shutdown could reshape UK fiscal policy and household finances,even as global oil reserves buffer short‑term shocks.