Is Trump blowing up the world economy - as well as Iran?

0:00Are you trying to get weight loss support through telehealth, but it feels overwhelming and rushed? Check out orderlymeds.com now. Orderlymeds.com was built to be different. Here, you connect with real doctors who take the time to understand your goals, review your eligibility, and guide you through a plan that's right for you. Orderlymeds provides access to proven GLP-1 medications like semaglutide and terzepatide, including both name brand options and personalized compound versions when appropriate. So you have choices backed by clinical oversight, not guesswork. It's a simpler, more supportive telehealth experience designed around people who want clarity, care, and confidence in their weight loss journey.

0:38And your medication is delivered directly to your home in discreet packaging. So your experience stays private from start to finish. Do your research. Ask the right questions. Then visit orderlymeds.com slash podcast for an exclusive offer. Again, that's orderlymeds.com slash podcast. Individual results may vary. Not medical advice. Eligibility required. See site for details. This is a Global Player original podcast. The longer this goes on, the more likely the potential for an impact on our economy, impact into the lives and households of everybody and every business. And our job is to get ahead of that, to look around the corner, assess the risk, monitor the risks and work with others in relation to that.

1:24The Prime Minister there talking about the risks to the UK and elsewhere flowing from the Iran war. As ever, Keir Starmer was understated. As of Monday, we are now facing what looks like it could be the most severe energy price shock we've seen since the 1970s. And don't think that America, with its vast oil supplies, is immune or protected from this. It's not. And might that be what leads Donald Trump to end this war? Welcome to the News Agents.

2:03The News Agents. It's John. It's Lewis. And last week, we were naturally talking a lot about the military side of things, how relatively successful, certainly awesome in the literal sense of the word, that had been the death of the Ayatollah. We have now a new Supreme Leader, Kelsa Preeze, the Ayatollah's son. We might talk about that a little bit. But it feels as if, as this second full week of the war starts, that we will be talking far more about the potential political and economic consequences for all of us across the West. There has been turmoil in the markets this morning, in Asia and in Europe, half 12 in London at the time of recording.

2:42Oil prices have risen by 25 % over the weekend. They're now above, hovering at between$106 and$110 a barrel and climbing. Bear in mind, a month or so ago, they were between$60 and$70 a barrel. G7 finance leaders, including our own Chancellor Rachel Reeves, are meeting digitally this afternoon to discuss joint release of emergency reserves. Stock markets up and down across the world. Central banks warning, instead of interest rate cuts, as we were looking to have over the course of the next year, traders are now betting on a rise in interest rates later this year to try and deal with the inflation the increase in energy prices are likely to cause.

3:27And meanwhile, the cost of UK government borrowing has been rising significantly. Indeed, two-year bonds are on track for the worst day since Liz Truss's mini budget. So whereas before the government was hoping that this year would be a period of relative economic stability and growth, we are back playing the game of instability and uncertainty all over again. Yeah, and just for, you know, if you're thinking about going to the petrol station to fill up your car, the AA and RAC are advising motorists to conserve fuel amid concerns about that soaring oil prices will soon head through to the pumps, saying that people should cut out non-essential journeys.

4:08The RAC is advising people to drive fuel efficiently by avoiding harsh acceleration or deceleration, etc, etc. Well, that won't cause panic. No, exactly. Nothing to worry about, folks. But, you know, we're talking about the AA and RAC. Let me talk about the AAA, which is the American Automobile Association, because they are issuing similar warnings where West Texas Intermediate, which is the sort of, you know, what we talk about, Brent Crude. In America, they talk about the price of West Texas intermediate. That's gone up something like 35 percent. And where Donald Trump was boasting just two weeks ago about that in many places, gas, petrol was now under two dollars a gallon.

4:53I know we can only dream of prices like that in this country. In places in California, it's now over five dollars a gallon. And in other places, it's also rising sharply. add to that one other thing we talk about the fuel shock there is a fertilizer shock in all of this as well in that nearly all synthetic fertilizer is produced in the gulf the straits of humus are more or less shut fertilizer is not getting through to farmers that either means that to get hold of fertilizer you're going to have to pay massively more or you're going to have to use less fertilizer and less nitrogen put into the ground in which case the crop yields will be smaller and you know you just have to follow that supply chain through very simply it means that food prices will go up and in this year when everyone agrees that the midterm elections in november in the us will be about affordability that is a big issue look i mean unless this war were to end extremely quickly which might happen could discuss that unless it were to end extremely quickly we are looking once again at a potential at another potential inflationary price shock in the UK which follows a series of others that we've obviously had over just the you know the past five years whether it's Covid or the Ukraine war we're now looking at another one energy prices determine the price of everything if we are looking at a significant increase in the cost of the increase of oil let's leave aside liquefied gas for the moment oil alone because so much of our logistics and trades is still powered on that fundamental fossil fuel if the price of oil rapidly increases and these are the biggest short-term oil price increases pretty much that we've ever seen then you can bet everything that virtually every price of every good that we have will increase with it why is this happening just to remind people it is because the iran war is hitting at the heart of the global oil and gas system john you've already talked about the strait of hormuz this is a narrow shipping lane through which roughly a fifth of the world's oil and large amounts of liquefied natural gas pass every single day.

7:00It is now basically impossible to insure those ships going through those straits. As a result, if you can't get insurance, you pretty much just can't sail through it. And now we're basically seeing traffic fall to near zero levels. Traders now fear disruption to all of those supplies of oil and gas, which has significant impact on virtually every market, some of which agricultural, John, you've identified, but virtually every market as well. Let's just take the gas part of that. We generally, we get most of our liquefied gas supplies from Europe and from North America, from the United States. But because it is a global market, we're in a situation where even though our supplies should be okay, even though we've only got two days worth of supply and storage, it is the case that we will end up paying a premium as a result of the increases in the prices that we're seeing.

7:50So economically, it is a nightmarish, genuinely nightmarish scenario for finance ministers and for every government all over the world, whether you're involved in this war or you're not involved in this war. So in Washington, and I think, you know, I'm focusing on Washington because ultimately it's Donald Trump who's going to decide whether this war goes on or stops. You know, the Republicans who are charged with planning for the midterm elections are already talking not about whether this is going to be good or bad for the economy. They're discussing whether this is going to be bad or catastrophic for the economy.

8:25There is no upside. There is no neutral. There is only going to be a view. Oh, geez, the US economy is really bad or it's bloody awful. And that is the result of what Donald Trump has done with this war of choice. And then you've got to ask, well, how long will Trump have the stomach or the interest in this war when we still don't know what the war aims are? We read all sorts of bizarre things like maybe special forces will go and take the nuclear sites in Iran and take away all the nuclear material. And you think, really, are they really going to put troops on the ground? So it's perfectly possible that by the end of this week, Donald Trump will have said, OK, I've won.

9:09I'm going home now and just leave the Middle East in a bit more chaos than it was when he found it. Frankly, Keir Starmer's decision not to get involved in this war or to express scepticism of this war, because we are involved to some extent, but not to certainly commit UK troops and not to allow Americans to use our bases for offensive operations. I think frankly that decision is aging like a fine wine because you can just imagine you can just imagine that this is exactly what Keir Starmer and the ministers around him who are sceptical of all of this, this is exactly likely what they predicted would happen because it was obvious that if this war went on for any length of time that this is what would happen.

9:49It is clear to me I think that the Americans and Trump and Hexas and the rest of us, they thought this would be a bit like Venezuela. We talked a few weeks ago about exactly this idea of getting addicted to this sort of intervention, just like Tony Blair did and to a lesser extent George W. Bush and others, you know, because it works. You do a few small things like Blair did with Sierra Leone and Kosovo. They weren't small. And of course, they're very important in those places. But by comparison to what was to come later, they were small. They go well. You get lauded for it. You feel like you have a wisdom and an understanding that others don't.

10:23And of course, those interventions that grew in the Blair sort of liberal interventionist period in the late 90s, early 2000s, that happened over a series of years. Of course, Donald Trump political time is like dog years by comparison to normal political time. So he's doing this in terms of news cycles and he's got addicted to it. And I think that they thought that this would be simple, that you could decapitate the regime and then bully it into basically becoming a sort of economic colony vassal, which is basically what they've done with Venezuela. That was never going to happen. Iran is a far tougher beast than anything that they've done before.

10:54And not only is it tougher, but also it finds itself as a result of its strategic position. It is at the centre, not because of its economy itself, because of its location. It is basically the centre of the global hydrocarbon economy. And Donald Trump is now in a situation where he's saying, he said, that any increase in prices is a small price to pay for the defenestration of the regime or for the neutering of Iran. Well, number one, we still don't know that that is actually going to happen. But number two as well, he actually hasn't convinced anyone of that. Because this came out of nowhere, there wasn't a long run up to it.

11:31There wasn't a long attempt to manufacture consent among the American population. There wasn't a long attempt to explain what the administration was doing. all Americans are going to feel, a bit like much of the rest of the world, is confusion. Confusion as to why it is that they're going to the petrol pump and they're finding that the prices have gone up. Confusion when they go to the supermarket and they find that prices have gone up. And confusion if this goes on for a long time when they come to remortgage, that they're paying way more than they thought they would have done if this war hadn't actually taken place.

12:02So I think that Stammer decision, now we're seeing this instability really just tear through the global economic order. That Starmer decision is looking wiser by the day. And I think it's so interesting that, look, over the weekend or last night, we had the announcement that Ali Khamenei's replacement would be roll of drums his son Mokhtaba Khamenei. Now, they are cut from the same cloth. They are hardliners. He, Mokhtaba, is very popular with the Revolutionary Guard. So you have got the hardliners still in control in Iran. And unfortunately, in Iran, you cut off the head of the monster and there are other heads that appear.

12:48And that is the way, after the revolution, the country was set up. It was set up so that these various councils would have replacements because they knew that they were going to encounter opposition. It wasn't like Ceausescu's Romania. You get rid of Ceausescu and boom, there's a liberation and the country's free. There are revolutionary councils that are set up and established. And so if America stops, as I think it's possible it will do by the end of the week because fuel prices have gone so high. What are you left with? You're left with a regime that is still in place. yes weakened but internal repression against the people that donald trump was saying needed to rise up and liberate themselves will be crushed and so the idea that anything has made progress in the middle east is frankly risible well so far john we've succeeded in killing an 86 year old man who frankly time scythe was coming for and replaced him with his youngest son that's what's been achieved so far.

13:47Yes, there has been some military degradation of Iran's capabilities, clearly. But what it has also done is completely destabilise the international political and economic order. We can't yet know what those consequences are going to be. If this war continues, it feels to me like we are in the worst of all worlds. Because if this war continues, the economic consequences, I think, are going to be truly, truly profound. We might be looking at their 1970s style, as I say, energy price shock. The energy price shocks that we saw again as a result of Middle Eastern wars in the 1970s had huge political consequences in the West.

14:24We don't necessarily have time to go into all of that now, but it was truly seismic for all sorts of different reasons. And that's if the war continues. If it doesn't continue, which I agree with you, I can completely see that we get to Friday or maybe next week and Trump declares mission accomplished, 2003 George W. Bush style, to even more fanfare and to even more pomp, tells everybody that they're going to shut up and go home. And then where will we be left? We'll be left with, as you say, an Iranian regime, which is furious, which is probably even more determined to plot terrorist attacks across the West than it was before.

14:56I'm not especially convinced as to how Israel will be any of the safer in the long term, because what will the Iranians have learned from all of this? Well, they'll be even more determined than they were before to secure a nuclear weapon. And they'll probably know as well that the Americans aren't going to come back because they will have seen the political backlash that Trump experienced, and he ain't going to want to go there again. And in the meantime, the Western alliance is afraid even more. The Russians are richer than they were. I mean, it's just textbook. I hate to say exactly what we were talking about last week, which is the consequences of these things are so unknowable.

15:27And what Trump has done is basically blunder in without any sort of plan, any sort of mission. And everybody, including the Iranian people themselves, is going to be left picking up the pieces. Well, you see now the logic of the Iran nuclear agreement that was struck by Barack Obama and by the Germans and the British and the Russians to kind of get a nuclear deal so that there wouldn't be nuclear enrichment. Why? Because the alternative was so bad. The idea of attacking Iran was always seen as too risky and with so many uncertain consequences. And having learned the lessons of Iraq, you don't blunder into another Gulf War.

16:09And that's exactly what has happened. And so the wisdom of the JCPOA, the kind of agreement that led to Iran freezing its nuclear enrichment, you could see why that happened, because no leader thought it was a good idea to start a war with Iran when you don't know how it's finished. Now, maybe we're all completely wrong. I hope I am. I hope that somehow there is regime change. I hope that the good people of Iran are able to self-govern and be free to wear what they want and to free to express their sexuality how they want. I hope that Iran becomes a liberal democracy. Do I think this is around the corner as a result of Donald Trump's actions?

16:50No. Well, I mean, there are all sorts of ways in which in the long term as well, this weakens America. I mean, look, if this goes on for a reasonably long time, it pushes bond yields up, it becomes more expensive for America to borrow. Investors are more concerned about their prospects for long-term American debt. America also ends up in a situation where it is exhausted more of its own munitions and its own military supplies, some of which had already been worn down as a result of supporting Ukraine. And Russia, again, is strengthened because of all the extra money that it's going to receive in its treasury as a result of the higher costs or higher prices for oil and gas.

17:26Strategically, where does this? I mean, we're constantly told this is part of the great game. You know, this is part of the great game to defeat China and to a lesser extent, Russia. How does it play into that? How does it play into that? I haven't seen a single convincing or compelling explanation as to how, given the economic effects to which America is not immune, far from it, given it is at the centre of the global economy. Strategically speaking, I don't see how that enhances America's role in that game at all. And, you know, for Trump, it feels to me as if he must be truly bored of domestic politics, because whatever you think of him, he's always had a pretty good feel for his base, but not just his base, I think, you know, for a certain reasonable, you know, the median American voter, you know, to some extent at least.

18:10He's had a good feel for it. And for him to turn around and go, this is a small price to pay, that feels to me like it could be a quote that is an albatross around, if not his neck, then certainly Republicans come November, particularly if that price keeps getting bigger and bigger and bigger. if the war endures. Well, look, we talked about the mistake that Trump made at the State of the Union, where he sort of did the Joe Biden thing of saying, well, I know you're worried about affordability, but you're wrong. Things are fine. Prices have come down. Now, obviously, Donald Trump is a more convincing communicator than Joe Biden was.

18:45And so he does manage to tell people to think things that they objectively know to be bullshit. But at the same time, he's done that. And he's also saying to them now, a foreign war, a small price to pay. That is so contrary to everything that Donald Trump ran on when he was asking the Americans to vote for him again in November 2024. It was all about ending the forever wars. It was not getting involved in foreign entanglements. And yet the US military has been used so many times in the past year, notably with the stunningly successful operation to lift Maduro and get Kelsey Rodriguez to take over as president and to be more amenable.

19:27And I think that's just, as you say, Lewis, gone to the head. Oh, I can use the American military and I can do whatever I want. No, you can't.

19:39From a range of trusted voices and award-winning journalists. Good morning, I'm Nick Ferrari. It's time to get to your calls. Find out the latest news and hear every side of the story. I will say the UK has been very, very uncooperative. They ruin relationships. This is not Winston Churchill that we're dealing with. The Prime Minister sticks to his guns over Iran, but if Iran is the question, is a Churchillian response even the answer? The conflict in the Middle East. Follow it live on LBC. Listen on our free global player app or the LBC app. Less support through telehealth, but it feels overwhelming and rushed.

20:17Check out orderlymeds.com now. Now, orderlymeds.com was built to be different. Here, you connect with real doctors who take the time to understand your goals, review your eligibility, and guide you through a plan that's right for you. Orderly Meds provides access to proven GLP-1 medications like semaglutide and terzepatide, including both name brand options and personalized compound versions when appropriate. So you have choices backed by clinical oversight, not guesswork. It's a simpler, more supportive telehealth experience design around people who want clarity, care, and confidence in a weight loss journey.

20:51And your medication is delivered directly to your home in discreet packaging. So your experience stays private from start to finish. Do your research. Ask the right questions. Then visit orderlymeds.com slash podcast for an exclusive offer. Again, that's orderlymeds.com slash podcast. Individual results may vary. Not medical advice. Eligibility required. See site for details.

21:18The News Agents. So, Lewis, we spoke earlier about the flack that Starmer has taken over his decision to only give qualified support for the US in their operation with Iran and has taken a lot of heat from Donald Trump. And so what was the last thing he would have expected? Enter stage right, Tony Blair, former prime minister, speaking at a lunch where he sounds off. Yeah, you'll be absolutely amazed to hear that Tony Blair believes that the British prime minister ought to back the American president in whatever weird foreign adventure in the Middle East that they want to get involved in. At a private lunch on Friday, the former Labour prime minister apparently said that Keir Starmer should have backed America from the very beginning, like who, and let the Trump administration use British air bases, He's adding, if they are your ally and they're an indispensable cornerstone for your security, you would better show up when they want you.

22:17This was at a private lunch, although it was basically, I believe it was a Jewish news event. So, you know, there are going to be a few journalists there. It's basically a newspaper. OK, I'll put my hands up. I had been invited to this lunch and couldn't go to it. Ah. And I thought, I can't believe. Bet you're gutted now. You could have had the scoop. So, well, yeah, but if I'd gone to it, I'd probably felt I couldn't talk about it because I bet everyone was told that this was strictly Chatham House rules and there's meant to be no reporting of it. I just couldn't believe that Blair was doing it because, let's face it, he has kept an incredibly low profile.

22:50When was the last time you saw Tony Blair in a studio doing an interview about, you know, what's happening in the world? He's absolutely stayed away from it. You know, there's the whole questions about him on the board of peace. You want to ask him about how he thinks Keir Starmer's leadership is going. You want to ask him about the war in Iran. And he's been staying away. And I kept on expecting this lunch, get a notification, and this lunch had been called off and it went ahead. What did Tony Blair think? That you're going to go to a lunch organised by a newspaper? And none of it, none of it is going to emerge into the public view?

23:22I'm not saying that Tony Blair did this deliberately. I'm sure he didn't. And I think he's apparently very pissed off that his words came out. But surely he knows better than to think, oh, well, this is a safe space. I'll be able to express my viewpoints, you know, clearly on Donald Trump and the wisdom of Donald Trump's action. And it won't get reported. Well, it's also been reported, I think, that Blair has communicated his frustrations directly to the government. So it won't have come as a surprise to them, although perhaps a surprise that he said it in a more public venue. Yvette Cooper, the foreign secretary, was out on the airwaves on Sunday, including with me on my LBC show.

23:57This is what she had to say about Blair's intervention. Tony Blair has said that your government has made a mistake not backing the Americans from the beginning. What do you say to him? Well, I think this probably goes back to the point that I made before. I think there are some people who think that we should agree with the US, whatever. There are other people who think that we should never agree with the US. I don't think either of those positions is in the national interest. He's wrong. And is in the UK national interest. Tony Blair's wrong. So I don't agree with him on that. I think that Keir Starmer took a decision that was based really on UK interests and values.

24:33I do think also it's right to make sure that we learn the lessons from Iraq and things that went wrong. I think we should learn those lessons and that it means that you have to be really hard headed about what is in the UK interest. I said in the first half that Starmer's decision is ageing like a fine wine. I don't think that's just in terms of, as I said there, that the wisdom of it is being proven because of all of the unintended consequences, political and economic, which are being unleashed. I think that's part of it. I also think in terms of domestic politics, its wisdom is being vindicated as well.

25:10Why do I say that? Well, because let's assume this war does go on for some time. And let's assume there are those substantial increases in energy prices. Let's assume it might push us in to a recession. Let's assume it might increase unemployment further. Let's assume there has to be a big borrowing spree to fund, as Liz Truss did, that great free marketeer, to basically subsidise people's energy prices. He would therefore, Starmer that is, have been in a position, if he'd backed it to the hilt, as Blair would have done, he would have had no choice but to take the Trump line, which is these consequences are bad, but you know what?

25:44It's worth it. It's a small price to pay. He would have been in a position where he had to defend a war that he doesn't really understand the point or purpose of. Now, I think that politically speaking alone, that would have been disastrous for him. It would have been disastrous for his base. It just so happens that it also basically aligns with what he thinks is right. So that's a sort of healthy outcome of politics. But I think if he had been in a position where just because Donald Trump wanted him to do something and just because of what Blair has, which I think is an incorrect and a historical or or historical nonsense understanding, really, of the history of the UK-US relationship, which is that the British prime minister has to back the American president, come what may, in all circumstances, which is not true.

26:27then I think Starmot would have been in a really bad place. And also, let's be honest, let's be honest, he's sort of in the best of both worlds. Yeah, he's pissed Trump off a bit, but they're still using the bases. He's still able to turn to him and say, look, when push comes to shove, we're there for you. But I had particular problems with the way this came out to begin with. So, you know, I think all in all, for once, Starmot's political judgment on this and that of the wider cabinet, I think he's being vindicated. So just going back over it, I think that Tony Blair was right in 2003 to support George W.