Lloyds takes £151m hit from Iran war as it forecasts rise in UK unemployment

Lloyds has warned that the economic fallout from the Middle East conflict could cost it £151m amid rising unemployment and inflation and a slowdown in the housing market. The FTSE 100 group, whose brands include Lloyds Bank, Halifax and Bank of Scotland, issued a downbeat economic forecast that it said reflects the stagflationary consequences – the double hit of rising inflation at the same time as slower economic growth – for the UK and global economies. Overall, Lloyds expects its base case for UK gross domestic product growth to be only 0.5% this year, lower than the 0.8% forecast by the International Monetary Fund earlier this month. Lloyds forecasts include a rise in the UK unemployment rate to 5.6% by the second half of the year. Last week the Office for National Statistics put the rate of unemployment at 4.9% in February but said it expected that to climb because of the conflict. The bank also said that increases in energy prices – the price of oil is currently at more than $114 a barrel – is pushing up inflation, with an expectation that the rate will hit 3.9% by the end of this year. UK inflation is currently running at 3.3% . However, Lloyds believes that the Bank of England will not move to increase the base interest rate, which stands at 3.75%, this year, but will also not cut it until the third quarter of 2027. The market is currently factoring in at least two rate rises by the monetary policy committee by the end of the year. …