War & Militarism Morning Star
Iran war triggers further increase to interest rate
US President Donald Trump’s war hit working people again today as the Gulf conflict led the Bank of England (BoE) to raise interest rates to 4 per cent. The energy crisis caused by the attack on Iran
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The energy crisis caused by the attack on Iran has fuelled inflation and hence the bank rate, with the rise the first for over three years.
In a statement, the BoE said the rise — from 3.75 per cent — was down to “the conflict in the Middle East” which is now in its ninth month.
“Global energy prices have continued to rise from an already elevated level. UK [consumer price index] inflation increased to 3.5 per cent in September.”
Chancellor John Healey backed the BoE’s argument, saying: “The Iran conflict is reaching deep into the pockets of families and businesses here at home.”
He also said that in his Budget statement last week, he had pledged “big changes to our energy system so Britain is better protected from global shocks in the future.”
TUC assistant general secretary Kate Bell said: “Households are already up against it with rising prices because of Donald Trump’s reckless and illegal warmongering.
“Today’s decision to raise interest rates in response to skyrocketing energy costs risks slowing the economy and hitting workers and businesses alike with bigger costs.
“That’s why it’s so important that the government does all it can to help resolve conflicts abroad, and remains laser focused on keeping costs down and boosting incomes at home.
“A rapid end to Trump’s illegal war will be essential to rebuilding living standards and strengthening growth,” Ms Bell added.
A Stop the War Coalition spokesperson said the BoE’s move showed that “working people in Britain are paying the price for the imperialist aggression unleashed by Trump and [Israeli PM Benjamin] Netanyahu.
“Andy Burnham must be unequivocal in telling Trump to abandon the war, and should withdraw all British assistance for it.”
With the BoE warning that inflation will rise to 5 per cent by the middle of next year, further rate rises can be anticipated.
Today’s vote by the monetary policy committee was 8-1, with the outlier being Caterine Mann, who wanted a still steeper rise of half a per cent.
Ms Mann said she was keen to bear down on wage demands, which would mean workers paying a still higher price in real wage cuts.
In other bad news for the government, construction sector activity fell sharply last month. The steep drop in housebuilding adds to fears that the government will miss by a mile its target of building 1.5 million new homes this parliament.