The real cost of war, as we have witnessed recently in the Middle East and ongoing in Ukraine, is not something that can be measured in monetary terms, of course. But there are financial implications to any crisis and this is no exception.

You have to have some sympathy with Chancellor Rachel Reeves’ position. Whatever you think of her performance to date, and my view is well documented, she cannot have expected her plans to have been disrupted in this way. Some of the factors that affect your and my pocket directly were working in the right direction, perhaps more slowly than ideal, but this latest conflict has halted, and will probably reverse, that progress.

Energy costs have already risen and will probably continue to go higher

However they play out, and despite energy price caps that largely prevented immediate price increases in domestic costs, energy costs have already risen and will probably continue to go higher. Fuel costs for electric vehicles will look even better against those still using petrol and diesel.

All of this is likely to fuel inflation (sorry about the pun!). It was already above government targets, but it was heading in the right direction. These increases will push it back the other way. It will probably worsen when transport costs go up as a natural result and get passed on to the consumer in higher prices for food and other essentials.
Economic forecasters will be hoping interest rates don’t go too far in the opposite direction

As inflation starts to grow again, interest rates will almost certainly go up too, as they are one of the measures used to cool inflationary pressures. Most economic forecasters were confident of more interest rate reductions this year. Now they are hoping that rates don’t go too far or too fast in the opposite direction.

Here’s to it all coming under control again as soon as possible.