Lloyds takes £151m hit from Iran war as it forecasts rise in UK unemployment
Summary
Lloyds Bank says the conflict in the Middle East could cost it £151 million and cause slower growth and higher unemployment in the UK this year. The bank predicts UK economic growth to be weak, unemployment to rise, and inflation to increase, mainly due to higher energy prices.Key Facts
- Lloyds expects a £151 million cost from the Middle East conflict’s economic effects.
- UK economic growth forecast is 0.5% for this year, lower than the IMF’s 0.8% estimate.
- UK unemployment is expected to rise to 5.6% by late 2024, up from 4.9% in February.
- Inflation in the UK is currently at 3.3% but is forecast to reach 3.9% by the end of the year due to rising oil prices (over $114 per barrel).
- Lloyds does not expect the Bank of England to raise interest rates this year or cut them before 2027.
- Lloyds reported a £295 million impairment charge this quarter, slightly lower than last year.
- Lloyds’ pre-tax profits rose by one-third to £2 billion in the first quarter, beating analyst predictions.
- The banking sector’s profits have increased amid market volatility caused by the Iran war; oil companies are also making high profits.
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