Garys Economics The Iran economic shock is coming. How to protect yourself
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Apr 5, 2026 A looming energy shock from Iran and the Gulf and what that means for inflation and interest rates. Why rising borrowing costs limit government support and who is most hurt by price spikes. How ownership of resources and assets shields the wealthy. Practical suggestions on diversifying assets and using taxes to rebuild public wealth and protect citizens.
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Energy Shock Will Raise Inflation And Rates
- The Iran war is creating an energy shock that will raise oil, gas and food prices and push global inflation higher.
- Markets expect central banks to reverse easing and hike rates, which raises mortgage costs and government borrowing costs worldwide.
UK Borrowing Costs Cut Government Fiscal Space
- The UK faces especially high borrowing costs and low growth, making it harder for government to fund support during an energy shock.
- Ten-year UK borrowing yields rose to just under 5% from ~4.2% a month earlier, reducing fiscal space.
Avoid Relying On Broad Energy Price Caps
- Avoid relying on blanket government energy subsidies because they transfer wealth to energy owners and deplete public assets.
- Price caps mean governments pay the difference and that extra money mostly goes to energy owners, increasing inequality.