There are renewed fears of economic turmoil in Britain after an escalation in the conflicts in the Middle East, economists have warned.
Last night’s drone strike on Hamas leaders in Beirut sparked a furious response across the Arab world, with missiles fired towards commercial shipping in the Red Sea by Houthi rebels.
British maritime security firm Ambrey said that a Malta-flagged container ship reported explosions fired towards close to Yemen.
It contacted the maritime coalition for support.
The United Kingdom Maritime Trade Operations (UKMTO) organization said last night that it had received reports of three explosions in the Bab al-Mandab strait
Wikimedia Commons
Ambrey said it understood that three missiles had been fired from the direction of Yemen’s Taiz Governorate, Reuters reported.
The United Kingdom Maritime Trade Operations (UKMTO) organisation said last night that it had received reports of three explosions in the Bab al-Mandeb strait, a key chokepoint just 30-km-wide in the Red Sea.
Several shipping firms are still avoiding the Red Sea route, taking the much longer Cape of Good Hope Africa route, adding some 5,000 miles and over 9 days to their journeys.
The British Retail Consortium (BRC) warned that this continued shipping disruption could affect both prices and the availability of goods.
Its chief executive Helen Dickinson said these knocks to the economy could come “as a result of higher transportation and shipping insurance costs.”
She warned that “some goods will take longer to be shipped.”
Economist Philip Pilkington told GB News: “This latest attack comes on the back of a Maersk ship being hit with a missile last week, after which four small Houthi boats tried to board it and were either sunk or chased off by American helicopters.
“After this, most shipping companies have announced that they will be suspending transit through the Red Sea indefinitely.”
Pilkington added: “The problem with Operation Prosperity Guardian from the outset was that, while the US Navy and its partners can certainly provide some protection to commercial vessels in the Red Sea, it cannot be everywhere at once.
“Without blanket protection, it makes sense that commercial shipping companies will take the longer route. Unless something changes drastically that means less oil, gas, container ships, and bulk goods being shipped - especially to Europe and the United Kingdom.
“A further bout of inflation seems perfectly possible.”
Pilkington’s warning comes as regional Arab powers and terror groups issued belligerent statements after a surgical drone strike on Hamas leaders in Beirut.
Three Hamas leaders were reportedly killed in the Lebanese capital after Israeli missiles reportedly hit a block of flats in the southern suburb.
The IDF did not respond to questions about their involvement in the assassination when contacted by this broadcaster.
Pilkington also issued a warning about the current oil price amid the Red Sea crisis.
Firefighters and civil defense are seen in a damaged building that was allegedly targeted by an Israeli drone strike on January 2, 2024 in Dahiyeh, a suburb of Beirut, Lebanon
Getty“Effectively the markets, through aggressive short-selling that have little relation to reality, are ‘printing oil’. This is enormously dangerous.
“First of all, it reduces the credibility of Western energy markets - and hence the petrodollar - at a key moment of geopolitical turmoil.”
He continued: “Secondly, it will cause consumers to over consume oil in the near term at artificially suppressed prices. When the underlying supply realities inevitably become apparent, the oil price may whipsaw causing major economic disruptions.”
The rising Red Sea tensions and warnings from economists have threatened to sink Rishi Sunak’s pledge to half inflation.
Of his five pledges, it is the only one that has been regularly championed by the prime minister and his allies.
But if these attacks on shipping continue, his pledge could soon be in tatters.