31 March 2026: Reeves urged to follow European countries and act amid rising fuel prices

Employer confidence in the UK recovered in the first quarter of this year, before the onset of the conflict in Iran, according to the Recruitment and Employment Confederation’s latest JobsOutlook.

The REC’s survey found that employer perceptions of the UK economy’s performance increased by 11% between December 2025 and February 2026 to a net -30%. While still historically weak, the trend was driven by a rebound in February to net -16% for the month.

The findings also show that businesses, while facing headwinds from rising costs, were more ready to invest at the beginning of 2026 than in the previous year.

Employer confidence in making investment and hiring decisions in their own business has been consistently more positive than firms’ view of the wider economy. This remains the case in the latest survey, with firms’ belief in themselves increasing in February (+9), the first such increase in several months.

Overall, employer hiring confidence improved in the quarter to net -5, from net -10 in the previous quarter.

“All economic data at the moment will be affected by the crisis in the Gulf, but these figures show that there was a possible change in momentum for business across the UK in the first part of the year,” the REC CEO said in a press release. Hiring, especially among SMEs, is now likely to be on hold until the full extent of the conflict in Iran is known.

However, he also noted that initial feedback from REC members suggested that any actions by hirers represented a delay to their plans rather than a cancellation, signalling a good chance of restored momentum if the crisis passes within the next one or two months.

The Prime Minister and Chancellor are under pressure to follow European countries and act to protect consumers from rapidly rising fuel prices after campaigners accused Ministers of treating drivers as a “cash cow for the Treasury”.

Oil prices, which obviously have a significant effect on the wholesale cost of fuel, have soared in response to Iran’s stranglehold on tankers passing through the Strait of Hormuz, pushing up pump prices and piling pressure on the Government to abandon a planned increase in fuel duty due in September.

Rachel Reeves announced in the November budget that the fuel duty reduction, introduced by the Conservative government in March 2022 after the outbreak of the war in Ukraine, would be extended until the end of August 2026, with rates then gradually returning to previous levels over the next five years.

Business leaders have been called upon to help lessen the economic impact of the war in Iran, as Keir Starmer acknowledged that the Government cannot shoulder the entire burden. Executives from energy, shipping, and banking firms were summoned to Downing Street for discussions as Donald Trump threatened to escalate the conflict in the Middle East.

The discussions in Downing Street centred on Iran’s ongoing blockade of the Strait of Hormuz, a vital shipping route for the oil and gas industry and for supplies of other products, such as fertiliser. The Prime Minister told the gathered officials at Downing Street that it must be a “joint effort” to address the war's impact, emphasising “the Government can’t do it on its own”.

The pound had a slightly weaker session overall yesterday, slipping modestly against other major currencies. Against the US dollar, it fell by around 0.49%, closing near 1.3173 after opening at 1.3272.

Across broader currency markets, the pound showed small declines versus the euro and Swiss franc, with GBP/EUR and GBP/CHF both down roughly 0.02% to 0.05% on the day.

This reflected a generally softer tone for sterling, influenced by global risk sentiment and expectations around interest rates. While the declines were not dramatic, they marked a pause after several days of firmer performance.

Federal Reserve Chair Jerome Powell told students at Harvard University that he was optimistic about their long-term employment prospects, despite the proliferation of AI.

“There’s no denying it’s a challenging time to enter the labour market, and it may take some patience, but in the longer term, this economy is going to give you great opportunities,” Powell said during a talk with students yesterday, according to Bloomberg.

Powell stated that although the U.S. economy was experiencing structural shifts due to AI and other advances, it remained dynamic.

Bloomberg noted that the unemployment rate for 20- to 24-year-olds was 7.4% after exceeding 9% last year.

Sen. Elizabeth Warren sent a blistering letter to Federal Reserve chair nominee Kevin Warsh last week, predicting he would serve as little more than a rubber stamp for President Trump’s Wall Street ‘First Agenda’, and accusing him of having learned nothing from his failures during a prior stint at the Central Bank.

Warren said in the letter reported first by CNBC that his record as a member of the Fed’s Board of Governors from 2006 until 2011, which included the 2008-09 financial crisis and Great Recession, “should have disqualified you from this proposed promotion.”

“But President Donald Trump has vowed that anybody who disagrees with him will never be the Fed Chairman,” Warren noted. “And you, apparently, have passed his test.”

“As Fed Chair, you will be responsible for directing the economy, amending policies that have serious consequences for American workers and communities,” Warren wrote. “However, your track record leading up to, during, and after the 2008 financial crisis raises significant concerns about your ability to do so.”

The letter, which CNBC obtained before it was publicly released, asked Warsh pointed, detailed questions about 10 different subject areas to be answered for his confirmation hearing at the Senate Banking Committee, where Warren is the ranking Democrat.

Three weeks after Donald Trump publicly claimed the Iran war was “very complete” and nearing an end, global oil markets have since moved in the opposite direction. Instead of stabilising, crude prices have soared more than 50%, driven by escalating conflict, widening regional involvement, and severe supply disruptions.

Trump’s early comments, made just one week into the conflict, briefly pushed oil down to around $91 as markets initially took his assessment at face value. But as the war intensified rather than eased, sentiment flipped sharply.

Brent crude futures climbed to around $113. In comparison, West Texas Intermediate rose to roughly $101, reflecting deepening concerns about supply constraints and the closure of key transit routes.

The Dollar Index remained broadly stable, with no significant fluctuations during yesterday’s session. Market data shows the index moved only slightly, indicating a day of relatively calm trading in global currency markets.

Over the past 5 days, the index has been down about 1.05%, indicating that yesterday’s stability followed a softer week overall.

Market commentary suggests traders were balancing shifting geopolitical sentiment with expectations around U.S. interest rates.

The war in Iran is increasingly reshaping Europe’s economic outlook, with ECB President Christine Lagarde warning that the longer the conflict continues, the deeper and more widespread the damage will be. What began as a distant geopolitical shock is now filtering through energy markets, supply chains, inflation, and even financial stability.

Europe’s vulnerability stems largely from its dependence on imported energy. The war has pushed oil prices above $100 per barrel, far above pre‑war levels, and disrupted flows through the Strait of Hormuz, a chokepoint for a quarter of global seaborne oil and a fifth of LNG shipments. This has reignited inflation pressures across the eurozone.

Economists warn that if elevated energy prices persist, eurozone inflation could rise significantly above the ECB’s 2% target. The ECB has already signalled its willingness to raise interest rates if higher energy costs spill over into wages and services. Goldman Sachs has already revised eurozone inflation forecasts upward and trimmed growth expectations.

The conflict is already dragging on economic activity. Eurozone growth has almost stalled, with purchasing managers’ data showing the sharpest slowdown in 10 months. Rising input costs and worsening supply chain delays are hitting manufacturers and households alike.

European Central Bank officials say spillover effects remain “contained” for now, but warn that a prolonged conflict could trigger broader systemic stress, especially if high asset valuations collide with rising risk premiums.

Europe is entering a period of heightened economic fragility. If the war in Iran continues, the shock will not remain confined to energy, it will seep into every sector, from manufacturing and transport to food prices and financial markets. The Eurozone’s fabled resilience is being tested, and policymakers are preparing for a scenario in which the conflict’s economic fallout deepens and becomes more persistent.

After the Easter holiday, the German Government will decide on new relief measures to assist consumers facing price rises due to the war in Iran, Economy Minister Katherina Reiche said. Signs of a significant economic slowdown in Germany are becoming evident, emphasising the need for these measures.

Reiche highlighted that signs of a notable economic slowdown are already appearing in the country.

The upcoming decisions are expected to ease the financial strain on consumers as Germany deals with the economic consequences of international tensions.

German companies are so deeply tied to both the United States and China that they cannot decouple from either without ‌incurring severe economic costs, according to a study by the University of Sussex and King's College London.

The researchers mapped sales, production, and supply-chain exposures of firms listed on Germany's DAX and MDAX indices, finding that dependence on the world's two largest economies spans sectors and individual companies.

The euro had a quiet, broadly stable trading session, with only modest movements against major currencies. Market conditions were calm, and there were no major data releases or policy surprises driving volatility. The common currency fell to a low of 1.1443 and closed at 1.1465.

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