A quarter of a million people could lose their jobs by the middle of next year as Britain “flirts with recession”, analysis suggests, after business confidence was shattered by the US-Israel war on Iran.

As the chancellor, Rachel Reeves, summoned bank chiefs for talks aimed at containing the fallout, twin reports from top accounting firms underlined the scale of the economic threat facing the UK.

Iran’s retaliatory closure of the strait of Hormuz trade route and its strikes on its regional neighbours, which have sent oil and gas prices soaring, will cause the biggest economic hit since the pandemic, according to the EY Item Club, an economic forecast group.

A separate report by Deloitte found finance chiefs at big UK businesses were already reining in their spending plans, taking action that was likely to weigh on economic activity and hiring.

#world