Unemployment is expected to rise above two million for the first time in more than a decade as the economy battles to stave off recession.
Official figures show payrolled employment has fallen by just over 140,000 since the Government was elected in 2024, with losses concentrated in retail, hospitality, manufacturing and IT businesses.
Companies have largely blamed this on rising taxes, including employers’ National Insurance Contributions and business rates.
Inflation has already climbed to 3.3pc in March and is expected to rise further through the year, with petrol prices currently up almost 25p per litre and diesel around 45p since the war began at the end of February.
Oil prices swung between $97 and $115 per barrel in the past week as hopes of a resolution to the war ebbed and flowed, up from around $70 in February.
The household energy price cap is expected to rise from £1,641 to around £1,900 per year when the regulatory limit is reset in July, with more increases possible later in the year.
This particularly hurts poorer households and those who need to commute by car.
“Higher energy and fuel prices will only widen the gap in living standards between UK cities,” said Mr Lyne.
“More money goes on the essentials and when they go up in price significantly, it is cities like Newcastle, Birmingham and Belfast that feel the biggest impact on their spending power.”
A government spokesman defended Labour’s record on jobs by claiming that 332,000 more people are in work than a year ago.
They also said that the Government “will do everything we can to support the country” through the Iran war, including by “slashing energy bills by up to 25pc for 10,000 manufacturers”.
The spokesman added: “We have the right economic plan to deal with prices rises caused by the war in the Middle East. It’s not our war, we’re not joining it, but we’re not immune to its effects which is why we’re supporting families with the cost of living in a responsible way.
“That includes taking £117 off household energy bills, increasing the national living wage to give a £900 boost to millions of workers, and freezing rail fares for the first time in three decades.”
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