Bank of England expected to leave interest rates on hold as oil and gas prices surge; UK pay growth hits five-year low– business live

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Charts: How UK state prices person deed three-year highs

This floor plan shows really UK state prices person surged complete 170p a therm today, arsenic nan Iran warfare has caused prices to much than double since precocious February.

The UK month-ahead state value complete nan past six months Photograph: LSEG

That jump is apt to thrust up family power bills this summer, unless nan Middle East conflict deescalates.

However, prices are still overmuch little than soon aft Russia’s penetration of Ukraine – erstwhile they concisely roseate complete 500p a therm.

A floor plan showing nan UK state value complete nan past 5 years Photograph: LSEG

Middle East conflict 'spooking nan markets' arsenic state and lipid prices jump

This morning’s surge successful lipid and state prices, and nan slowdown successful UK costs growth, are nan main things to watch successful nan markets today, reports Kathleen Brooks, research head at XTB:

• Brent crude has deed $113 a barrel, 1 of its highest levels since nan conflict began. The escalation successful nan conflict is spooking nan marketplace and futures markets are predicting hefty losses for stocks astatine nan open, arsenic consequence sentiment sours. Oil is driving nan autobus successful this market, and wherever it goes, consequence sentiment will follow.

• Nat state prices are surging erstwhile much and are higher by 30% aft nan attacks connected Qatar’s Ras Laffan state field. This has caused President Donald Trump to telephone connected Israel and Iran to extremity targeting power sites. However, it will return a batch of affirmative sentiment and news travel to calm power prices today.

• The UK labour marketplace information was not arsenic bad arsenic feared, nan unemployment complaint remained dependable astatine 5.2%, and nan UK’s labour marketplace was small changed astatine nan commencement of nan year.

• There are signs that businesses are hiring erstwhile more, nan ONS has reported an summation of 6,000 payrolled workers successful January and estimates a further 20,000 payrolled workers were added successful February. The vacancy complaint is stable, pinch declines successful smaller firms offset by increases successful jobs successful larger firms. This suggests that nan jobs outlook improved astatine nan commencement of nan twelvemonth compared to nan extremity of 2025.

• The large news is that UK wages retreated to their lowest level successful 5 years, pinch salary maturation slowing successful some nan backstage and nationalist sectors. This is 1 agleam spot successful an different anemic outlook for UK inflation. Today’s information continues to support a BOE who is concerned astir nan outlook for growth. The Middle East conflict continues to dominate, and it will return a awesome deescalation astatine this shape to boost marketplace sentiment and bring down power prices.

UK costs maturation was peculiarly anemic erstwhile you relationship for inflation.

Real regular salary (adjusted by nan user prices index) fell to conscionable 0.5% successful November-January. That’s nan lowest since May to July 2023.

Annual existent full salary maturation (using CPI) fell to 0.7% successful nan quarter.

UK costs maturation hits five-year low

UK costs maturation has slowed to a five-year low, successful a worrying motion for workers arsenic nan Middle East situation pushes up power costs.

Average salary (excluding bonuses) roseate by 3.8% successful nan 3 months to January, down from 4.1% successful October-December 2025, nan Office for National Statistics reports.

Growth successful full salary (including bonuses) slowed to 3.9% successful November-January, down from 4.2% a period earlier.

For some salary measures, this is nan slowest maturation since September to November 2020.

Today’s UK labour marketplace study besides shows nan unemployment complaint remained astatine a five-year precocious of 5.2%.

Luke Bartholomew, Deputy Chief Economist astatine Aberdeen, says:

double quotation mark“With unemployment staying dependable astatine 5.2% and a uncommon summation successful payrolls employment, this study paints a mildly much affirmative image of nan labour market. And pinch costs maturation softer again, successful normal times this would person been a comparatively reassuring study for nan Bank of England.

But nan study feels old successful ray of nan Iran conflict, and nan ostentation risks stemming from nan ample spike successful power prices. So while today’s Bank of England gathering had erstwhile looked for illustration nan apt constituent of nan adjacent complaint cut, alternatively argumentation is group to beryllium kept connected clasp coming arsenic policymakers springiness themselves much clip to spot really nan conflict plays out.

Negative proviso shocks are difficult for cardinal banks to navigate arsenic they push up connected ostentation and down connected maturation astatine nan aforesaid time. The dilemma is particularly acute for nan BoE correct now arsenic UK maturation was already anemic and ostentation expectations were besides little good anchored. So while we deliberation nan hurdle to returning to complaint hikes is very high, further complaint cuts whitethorn beryllium importantly delayed.”

UK state prices surge 25% arsenic Middle East situation escalates

European state prices are surging this greeting too.

The month-ahead UK wholesale state value has jumped by 25.5% this greeting to 175p a therm, its highest level since August 2022, Reuters points out.

The continental state value has rocketed too. The “front-month Dutch wholesale state price” is up complete 31% astatine €71.7 per Megawatt hour, its highest since nan extremity of December 2022.

Traders are reacting to yesterday’s escalation successful nan Middle East, wherever Iran attacked nan world’s largest liquefied earthy state installation successful Qatar aft Israel’s onslaught connected its South Pars gasfield, nan world’s largest.

In response, Donald Trump has threatened to “massively rustle up” South Pars wholly if Iran attacks Qatar again:

Oil up 6% today

The lipid value is rising quickly again today, adding to nan headache facing cardinal bankers.

Brent crude is up 5.9% astatine $113.76 a barrel, arsenic tensions escalate successful nan Middle East.

Israel’s onslaught connected Iran’s elephantine South Pars gasfield yesterday has shown that nan warfare has escalated, pinch Iran’s Revolutionary Guards threatening to target lipid and state accommodation crossed nan region successful response.

Introduction: Bank of England liking complaint determination today

Good morning, and invited to our rolling sum of business, nan financial markets and nan world economy.

The world’s cardinal bankers are facing a conundrum correct now. With nan Middle East situation pushing up power prices, ostentation risks lingering, and economies looking weak, should they trim borrowing costs to support maturation aliases raise them to subdue prices?

Rather than make a prime yet, there’s a beardown enticement to hold and see.

And that’s why nan Bank of England is expected to time off liking rates connected clasp astatine noon, aft its latest monetary argumentation committee meeting.

Before nan Iran conflict started, an liking complaint trim coming was seen arsenic an 80% chance by nan money markets. But now, pinch lipid complete $100 a barrel, nan markets bespeak there’s a 97% chance that nan BoE leaves liking rates connected clasp astatine 3.75% today.

Ajith Nair, CIO of Isio Investment Management, explains:

double quotation mark“Expectations for UK liking rates person shifted materially successful caller weeks, pinch markets now anticipating that nan Bank of England will clasp rates successful March, keeping rates astatine 3.75%, contempt antecedently pricing successful a cut.

The superior driver has been nan emergence successful lipid and state prices linked to nan Iran conflict, which has pushed ostentation risks higher. This creates a difficult backdrop for some policymakers and investors. In fixed income markets, UK authorities bonds person already travel nether unit astatine times, pinch yields rising arsenic rate‑cut expectations person been pared backmost and, much recently, partially restored. Shorter‑dated bonds are now reflecting a much uncertain way for argumentation alternatively than a straightforward easing cycle.

The European Central Bank is besides expected to time off liking rates connected clasp today.

The Bank of Japan has sewage nan shot rolling overnight, by leaving its lending rates unchanged, arsenic nan Bank of Canada did yesterday.

Last night, nan Federal Reserve near US liking rates connected hold, and warned that nan “implications of developments successful nan Middle East for nan US economy are uncertain”.

The agenda

• 7am GMT: UK labour unit report

• 8.30am GMT: Riksbank liking complaint decision

• Noon GMT: Bank of England rates decision

• 1.15pm GMT: European Central Bank liking complaint decision

• 1.45m GMT: European Central Bank property conference