The past week has reaffirmed the overriding wish for business – a period of a little certainty.

UK chancellor Rachel Reeves delivered her spring statement which was high on promise and low on real detail.

However, she resonated when she said: “This government has the right economic plan for our country, a plan that is even more important in a world that in the last few days has become yet more uncertain.

“With unfolding conflict in Iran and the Middle East. It is incumbent on me and on this government to chart a course through that uncertainty to secure our economy against shocks and protect families from the turbulence that we see beyond our borders.”

It was met with a degree of caution by business leaders.

“In a period of geopolitical upheaval, a Spring Forecast that prioritises certainty over chasing headlines is the right approach for the Chancellor,” explained Louise Hellem, CBI chief economist. “Reducing the cost of living, cutting borrowing, and growing the economy are the right priorities, but they cannot be achieved without clear efforts to tackle the high cost of doing business. That is what will give firms the headroom they need to invest in the technology, trade and training that drive jobs and wage growth.

“That requires government and business to work in partnership to lower industrial energy costs, find practical solutions to implementing the Employment Rights Act, and design a tax system that rewards, rather than penalises, employment, investment and risk-taking.”

She added: “Businesses back the growth mission and want to see delivery at pace. Delays in planning consents, skills approvals, grid connections, or access to innovation funding translate directly into lost investment, higher costs, and greater operational uncertainty.

“Modern business needs a UK that can move at speed where government and industry work together to remove bottlenecks, build capability and deliver major projects. Now is the moment to turn stability into momentum and give firms the confidence to invest, grow and deliver for communities across the country.”

However, Emma Wall, chief investment strategist, at Hargreaves Lansdown said geopolitical risks have drowned out anything Reeves had to say.

“The Chancellor was keen to stress the higher growth, lower inflation outlook for the UK in today’s Spring Statement,” she explained. “But markets are listening less to what is happening in the House of Commons and more on the war in the Middle East. Expectations that higher oil prices will flow through to re-inflation have sent yields higher, and cooled expectations for interest rate cuts.

“The market is now struggling to price in even a quarter point cut from the Bank of England’s Monetary Policy Committee. We think this is overly pessimistic but understand the caution. As we have previously shared, there are echoes of the 1979 Iranian revolution, which not only caused a significant shift in geopolitics and re-configuration of cross-globe allies and partnerships, but also resulted in an oil crisis which saw the price of crude double over the course of a year, higher global inflation and slower economic growth.

“It will be this stagflation risk that equity and bond markets are most sensitive to, but the dynamics of the oil market have evolved significantly over the past 45 years. Crucially, while oil prices may be higher now, consensus is that this disruption is transitory – and so too will the impact be on wider asset classes. In the event of an effective transition of power – and end to the fighting – oil prices are expected to return to $65 a barrel within weeks, and therefore the likelihood of a global growth shock is minimal.”

Politicians all too often will use a major news event to make unpopular announcements in the hope they are not picked up with the media and public’s attention elsewhere.

This week the UK Government has found its efforts to deliver  economic clarity have been shrouded by the fog of war.

Jon Guy, Editor,

Emerging Risks