No peace deal could leave UK economy in dire Strait

EY’s latest economic outlook has said GDP could slow to 0.5 per cent this year and contract to 0.2 per cent next year if the crucial waterway through which a fifth of the world’s oil and gas is normally carried stays shut.

This forecast makes US President Donald Trump’s claim yesterday that the outline of a deal to end the five-month-old conflict has been agreed all the more welcome.

His comments should be treated with a note of caution, however, as he has announced similar halts to strikes on several previous occasions only for fighting to resume.

But in spite of this, there should be grounds for optimism that progress is being made in bringing an end to the war and - hopefully - the high energy costs it has caused.

According to the Energy and Climate Intelligence Unit (ECIU), the conflict is costing £25 million a week in extra costs. The think-tank warns that by next year, as higher gas prices filter fully through to domestic energy bills, the volatility caused by the US-Iran war will have added around £90 to the average Scottish household’s energy costs.

Aside from the damaging impact on the global economy, Mr Trump will have domestic political reasons to bring the conflict to an end.

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The president will be keen to avoid going into November’s mid-term elections in the midst of an unpopular war with no end in sight. He will want to draw a line under the attacks on Iran and present some form of victory to US voters.

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Time will tell whether Mr Trump’s latest prediction of an imminent peace deal will materialise.

Iran appears sceptical, with the acting defence minister Majid Ibn al-Reza writing on X that the country remains on alert.

But if a ceasefire does not hold, the US president may opt to bring a swift conclusion to the war by means of escalation.