John Oxley is a consultant, writer, and broadcaster. His SubStack is Joxley Writes.
The hostilities in Iran may, tentatively be over.
The current ceasefire looks to have found an expensive way to keep the straits open and for both sides to de-escalate violence. Yet even if it holds beyond the initial two weeks, the economic consequences are far from over. For Britain, it could remain one of the defining features of this government – and make Labour’s defeat at the next election more likely.
As our politics and media shift from headline to headline, it is easy to forget that events like the war have lasting, and compounding, impacts. The circumstances do not snap back to the status quo ante as soon as an agreement is penned. Instead, while the worst extremes of the economic hit may have been avoided, the costs are going to reverberate for months to come.
First, there is the simple fact of the lingering damage.
A month of hostilities have degraded infrastructure across the Gulf. The worst damage is, of course, within Iran, but the regime’s retaliation has taken its toll too. In Qatar, damage to LNG facilities could cause acute challenges for several more months, and impact deliveries to Asia and Europe for years to come. Other attacks have damaged ports, oil fields, refineries and factories across the Gulf states.
Each will require complex and extensive repairs to be fully operational.
The service interruptions caused by the war will continue to reverberate though the system. The supply of oil and petroleum products links into a range of industries. All have faced increased costs and shortfalls in supply over the last month. They are unlikely to have excess capacity to make up for the recent problems – so shortages will flow through. Everything from fertilisers to steelmaking will be impacted.
Just one detailed example shows the scale of the problem. The micro-chip industry relies on helium as a coolant, getting a large proportion of it from Qatar, where it is a by-product of LNG production. During the crisis, prices surged, leading to companies slowing production and prioritising the most critical products. Even if prices subside, the lost capacity will be difficult to make up. Shortages will flow into industries that depend on the chips, from cars to smartphones, resulting in manufacturing challenges and higher prices.
Such scenarios will be repeated across industries. Agriculture will be affected by higher fertiliser costs, airlines by shortages in jet fuel, with problems compounding through secondary industries. Supply chains are now complex and globalised, magnifying the effects of major shocks like this. Even if the war remains on pause, a month’s worth of disruption will cause significant challenges for a long while after.
For the government, this translates into challenging political costs.
Inflation is likely to rise again, and we know how damaging that is for political fortunes. Rising prices will strain both household and public finances. Consumers will see higher prices for essentials, eating away at disposable income. Within the public sector, energy prices will be a significant drain, other costs will increase and there is likely to be renewed pressure on wage settlements. This will be a real challenge for an administration already failing to deliver on its goals and mired in unpopularity.
There are likely third order consequences too.
These shortfalls are not just a UK crisis, but a global one, and are likely to be felt more acutely in the poorest nations. Experts are already warning that disruption to fertiliser flows is likely to cause a hunger crisis across Asia and Africa. This could, in turn, trigger instability and conflict, driving more migration towards Europe. The crisis in Iran now may well become a push factor for small boat crossings through next year and beyond.
For Labour, the political danger is compounded by its timing. Starmer’s government was already struggling to articulate a coherent economic vision before the crisis; the renewed inflationary pressure now arrives like a second wave before the first has receded. Higher prices strained public finances, renewed pressure on wage settlements. These are not new problems, but they are newly urgent, and the government has no obvious answer to them.
The challenge on the right is coherently exploiting the difficulties the government faces. In the near two years since the general election, the new government has floundered like no other in the polls, but it remains unclear who the real beneficiaries are. No party on the right is succeeding as they should. Reform are out in front, but only by default. They have hit a ceiling, and it is a low one. Indeed, at present, even as the leading party, they are polling lower than the Conservatives did under Liz Truss.
Our own party finds itself politically inarticulate.
The Conservatives have slid downwards since the general election and seem worryingly relaxed about it. In the November of 2024, just a few months after the that historic defeat, we were on the up and in touching distance of Labour. Now we are stuck in as an also-ran in a politically fragmented landscape. We have not done enough to positively attract people, or to get into a winning position on the policies that matter to them.
The aftershocks of the Iran conflict are likely to determine many of the issues for the coming months. Voters are going to be rocked by inflation and see renewed strain on public services. All parties are struggling because they have failed to find convincing answers on this. The Tories are hindered by our record, Labour by their performance in the current government. Reform and the Greens have drawn in many of those disillusioned by the traditional parties, but their economic populism has failed to convince a wider public. They look like winners at the moment, but only because our politics is so fragmented.
What is needed is not just opposition, but an alternative. The Conservatives have the instincts for it – on energy security, supply chain resilience, controlled borders – but instincts are not a programme. The party needs to do the harder work of converting its critique of Labour’s failures into a credible account of what it would do differently, and why that would work when its own recent record gives voters every reason to be sceptical.
Only then we will start to move the dial on public opinion.
The Iran crisis may feel like it is over, but its consequences will set the politics for months to come.
There is going to be a convergence of issues, with rising costs, strained public services and limited fiscal headroom, all landing simultaneously on a government that has exhausted goodwill. It is a window of opportunity – either for Labour to reassert themselves, or for other parties to surge through the division. The danger for the Conservatives is not that they lose to Labour again, it’s that they remain incoherent long enough that Reform or a fragmented parliament becomes the default. The window is shorter than the current relaxed mood in the party suggests. If we are serious about returning to power, we should seize it.