Red alert for British jobs cull as minister admits Trump's Middle East crisis will batter the economy

By JAMES TAPSFIELD, UK POLITICAL EDITOR Published: 11:50, 6 May 2026 | Updated: 11:50, 6 May 2026 Brits were put on high alert for jobs cull today as a Cabinet minister warned the Middle East chaos will batter the economy. Work and Pensions Secretary Pat McFadden said the ongoing closure of the Strait of Hormuz - through which a fifth of the world's oil typically passes - would have 'implications' for the labour market.  The bleak comments came with no end in sight to the standoff between the US and Iran, after Donald Trump launched the war at the end of February.  Mr Trump effectively shelved efforts to escort stranded tankers out of the Strait last night, despite previously branding the action 'Project Freedom'.  The President said he was pausing the plan to try and finalise a peace deal - although there is little evidence progress has been made towards one.  Touring broadcast studios for the Government this morning, Mr McFadden said the economy had been 'going in the right direction' before the US-Israeli war began. He said: 'The latest unemployment figures for February showed a fall, interest rates were expected to come down, the markets were pricing in a couple of cuts during the course of the year. Work and Pensions Secretary Pat McFadden said the ongoing closure of the Strait of Hormuz - through which a fifth of the world's oil typically passes - would have 'implications' for the labour market The UK jobless rate dipped to 4.9 per cent in the three months to February, its lowest level since last summer 'The truth is, with the effect of the Iran war, we can't count on any of that at the moment. There is likely to be an effect on prices, which feeds through from energy costs, and there may well be labour market implications.' Asked if this meant job losses, Mr McFadden replied: 'Yes. It could happen.' UK borrowing costs have been surging and there are already signs the turmoil is feeding through into higher inflation. A closely watched survey suggested today that growth in the UK's services sector rebounded somewhat last month. However, experts warned that firms face a 'short-lived' recovery amid surging costs and lower demand. The S&P Global UK services PMI survey showed a reading of 52.7 in April, up from 50.5 the previous month. Any reading above 50 means the sector is growing while any reading below signals it is contracting. Activity across the industry, which spans businesses from hospitality and leisure to healthcare and transport, has been increasing for almost a year. But while the latest reading marked an improvement from March – when the US-Israel's conflict with Iran escalated – it signals a slower rate of growth than at the start of the year. Businesses taking part in the survey, which is watched closely by economists, cited worries about intensifying pressures on inflation, global supply shortages and elevated borrowing costs as factors holding back business and consumer demand in April. Mr Trump's announcement last night followed US secretary of state Marco Rubio's insistence that a ceasefire in the region was holding after the initial military operation against Iran had concluded. Mr Rubio told a White House press briefing on Tuesday that for peace to be achieved, Iran must agree to the president's demands on its nuclear programme and to reopen the strait. Donald Trump effectively shelved efforts to escort stranded tankers out of the Strait last night, despite previously branding the action 'Project Freedom' US defence secretary Pete Hegseth also repeated he expected the rest of the world 'to step up', and said Washington would hand over responsibility 'at the appropriate time and soon'. A US blockade of Iranian ports is due to remain in place while talks are held to end the war.  The White House has been deeply critical of the response by the UK and other allies to the Gulf crisis, insisting other nations needed the strait more than the US. No comments have so far been submitted. Why not be the first to send us your thoughts, or debate this issue live on our message boards. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook. You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.