- 2 weeks ago
Category
📺
TVTranscript
00:08The United States and its partners have launched Operation Epic Fury.
00:14Two months after America and Israel went to war with Iran, what's the cost here at home?
00:23It's just bonkers. We just filled up the van and it's just cost us like just short of 130 pounds.
00:28It was a real shock to the system. My first initial thought was, how am I going to afford this?
00:34I've been traveling across the UK to find out just how big the shock could be.
00:40Oh, wow. It looks like it goes on for miles.
00:43We could do with a period of stability across the world because that's what's good for business.
00:49It seems so far away, but because it's in such an important part of the world,
00:55it impacts us today and hopefully this will not happen, but it will impact us a lot more tomorrow.
01:02Iran's around 3,000 miles away, but the cost is already beginning to hit home.
01:21The first time many of us feel the impact of the war is when we fill up our cars.
01:27Jump in the middle and then get your belt on, OK?
01:30Naomi and her 10-year-old daughter Rizia live in Chorley, Lancashire.
01:35Hello.
01:37Rizia has a serious medical condition which affects many other vital organs.
01:43She has regular hospital appointments more than 30 miles away, so the family's van is crucial to them.
01:50Well, it's just bonkers. We just filled up the van and it's just cost us like just short of £130.
01:58How's that doable to just carry on, you know, like filling up your van, you know, each time?
02:06Oh, right, OK, OK, OK.
02:09Naomi says the family's spending around £30 more a week on diesel since the war started.
02:15What are you going to do as a family in terms of preparing yourself for whether things could even get
02:20more expensive as the year goes on?
02:23I don't want my children to see that, you know, we struggle maybe because we have to go to hospital
02:31appointments.
02:31I don't want the children to see how worried we are because for us it's not an option.
02:37It is scary to think, you know, what the next few months is going to look like if fuel carries
02:41on rising.
02:43Yeah, it's scary.
02:48The cost of diesel has risen 35% since the war began at the end of February.
02:54Petrol is up 19%.
03:02It's all because of the standoff in the Strait of Hormuz, the narrow waterway off the coast of Iran.
03:09In normal times, around a fifth of the world's oil trade flows through it.
03:15After US and Israeli strikes, Iran retaliated, in part by threatening shipping in the Strait.
03:23There's now a fragile ceasefire, but the Strait remains effectively closed.
03:31So when you suddenly close the Strait, you cut off the supply of some really important commodities.
03:42But also, the oil producers have nowhere to store their oil, their gas, if they can't get it out.
03:50So what do they do? They shut down production.
03:53And when you shut down production, it's not like turning a light switch on and off.
03:58It takes time to restart it.
04:04Businesses up and down the UK are also feeling the effects of rising fuel costs.
04:10This haulage firm in Wiltshire runs a fleet of 85 trucks transporting everything from tinned peaches to garden furniture.
04:19It has 140 employees.
04:23We handle on the site here around 500 deliveries a day.
04:27So the international fleet go all over Europe.
04:31The fleet runs on diesel.
04:35How much diesel are you putting into this?
04:37This tank here, 710 litres.
04:39And just on the other side, on the same vehicle, another 320 litre tank on here.
04:44So yeah, over 1,000 litres of diesel.
04:451,000 litres?
04:46Yeah.
04:47How much is that going to cost?
04:49Today, somewhere in the region, excluding about 1,500 pounds.
04:57Toby's monthly diesel costs have shot up from around £260,000 to £340,000.
05:06That's a rise of around 80 grand.
05:09I've never seen it jump right out before. Never.
05:13Toby's firm passes those extra diesel costs on to its clients.
05:18Nobody likes telling the customers they've got to pay some more money for what we do for them every week.
05:24You know, essentially every Friday we send them an email saying your costs are going up again next week.
05:28And it's not a very nice message to deliver.
05:31But unfortunately, it's an essential one for us.
05:38And it's not just diesel.
05:41Toby's also had to cope with increased costs for oil and tyres.
05:45He fears what could happen if the standoff in the Strait of Hormuz drags on.
05:51The most significant factor will be if we start seeing fuel shortages across the country,
05:56that will then realistically have an impact upon goods delivered to supermarkets.
06:05Follow one of Toby's trucks out of the depot and it's clear the economic impact of the war is rippling
06:12across the UK.
06:14Now the cost of transportation is higher.
06:18And that gets translated to the supermarket shelves.
06:21And what you start seeing is a specific price shock, energy, becomes a much wider price shock, inflation.
06:30So there's a ripple effect throughout the chain.
06:33So if it's expensive for the transport company, it goes all the way back down eventually to the consumer.
06:39Correct. And the consumer, unfortunately, is the one entity that can't pass on the price to somebody else because they
06:47are the final consumer.
06:48So they have a choice. Consume things that are more expensive or consume less.
06:53And both are bad for the economy.
07:05So this is our bottling plant. We bottle, can and keg in this area.
07:18And how much are you producing?
07:20So we do about three million litres a year.
07:24Mark Lilly is a customer of Toby's haulage firm.
07:28He runs a family cider business in Somerset.
07:32As well as the increased transport costs, he's facing another problem.
07:38This is our pasteuriser. So this is run off steam, which comes from our boiler down in the boiler room,
07:44which is run off heating oil.
07:46Heating oil energy prices have more than doubled in price.
07:50So it's costing us more than £3,000 extra per month.
07:53Since the war started?
07:55Yeah.
07:55And what sort of impact is that having on your business?
07:58Yeah, it's big. So far, we haven't passed any costs on to our customers.
08:02So at the moment, we're taking the complete hit.
08:05So it's pretty much wiping out our profit for now.
08:09So how is that sustainable?
08:10It's not sustainable. We'll have to put our prices up, which will then, the consumer will have to pay it.
08:15So unless fuel prices come back down, then our prices will have to go up.
08:22Businesses like Marx aren't getting government support with the cost of heating oil.
08:27But the government is giving £53 million to low-income households who use it.
08:35Other household energy rates are capped, but that cap's almost certain to rise in July.
08:40So the biggest impact we've seen so far from this war in Iran is on disruption to energy infrastructure and
08:47the trading of energy around the world.
08:49And that will, in the end, hit all of our energy bills.
08:53We've been lucky in the UK that the energy price cap and the system that we have has meant that
08:59apart from people on heating oil,
09:00energy bills have actually fallen in April by about £117.
09:05But we know now pretty much for sure that that will reverse when the energy price cap comes in July.
09:10And it could increase further by another £100 or £200.
09:19Rez, you want to come down for your lunch?
09:22Families like Naomi's are already struggling to pay their bills.
09:27Since Russia's full-scale invasion of Ukraine in 2022, household energy bills have increased by around 14% on top
09:36of inflation.
09:37It's just cost us £850 for three months. Our gas and electricity bill has just absolutely rocketed.
09:48Rizia's health condition means she needs the house to be kept warm.
09:53She also relies on medical devices that use extra electricity.
09:58Rizia has multiple devices.
10:00She has to use a nebuliser, sometimes up to three times a day.
10:0415 minutes of a nebuliser and a feeding pump that has to be on charge or, you know, being plugged
10:12in overnight.
10:13So, yeah, we're starting to see a massive increase.
10:17You know, it's not just like, oh, it's gone up a little bit, you know, compared to a few years
10:21ago.
10:22How's it sustainable, you know, survivable?
10:27Go.
10:28Well done.
10:31If the energy price cap does rise in July, the warmer weather means most of us won't feel the squeeze
10:38straight away.
10:40What will really matter is what happens to those energy bills in the winter, which, if we're honest, is much
10:44more uncertain.
10:46Only about 15% of our energy bills happen in that third quarter of the year over the nice hot
10:52summer.
10:52But for the winter, if they remain high, that will be a much bigger struggle for families.
10:59After Russia's invasion of Ukraine, previous governments spent around £75 billion on help with energy bills, including a £400 rebate
11:11for every household.
11:13This time, it looks like any government support will be much more targeted.
11:17I can confirm to the House that contingency planning is taking place for every eventuality, so that we can keep
11:27costs down for everyone and provide support for those who need it most.
11:33What we've heard from the government is that they'll think about targeted support.
11:37And really, there's a big picture question here too, which is, as we go through yet another shock to the
11:42economy, what sort of support can we expect from a government?
11:46What sort of support can a government provide? And I think the government and the public finances have run out
11:52of road to be able to simply borrow and borrow each time in order to provide this very generous level
11:59of support.
12:06I'm Lucy Fleming, and I'm the managing director and owner of PM Mendes International Limited.
12:13The Iran war hasn't just affected energy prices. It's disrupted supply chains for businesses too.
12:21PM Mendes sells doors to suppliers, builders and online retailers.
12:29So I think a lot of people don't realise that a war thousands of miles away in the Middle East
12:33would affect, you know, a business in the UK.
12:37It's really challenging because if we absorb the costs, the only way that, you know, that can go is off
12:42our bottom line and off of our profits.
12:44So it makes margins very tight and it's very stressful.
12:54Lucy imports doors by sea from China and Indonesia.
12:59They used to come through the Middle East, but fears about the safety of shipping means the routes had to
13:05change.
13:06They used to take four weeks to get here from China or Indonesia. Now they have to go around the
13:11Cape of Africa to get to us.
13:12So now you are waiting eight weeks to get containers and then to have to pay more for it as
13:17well.
13:18But I think it's one of those things that you keep an eye on your numbers and you just look
13:22and see, right, have we done everything we can to be as efficient as possible?
13:25And then the last resort is to pass that on to the customers.
13:30There's this concept of choke points and choke points are areas where if something happens, if they are choked, you
13:40start having all sorts of disruptions.
13:42The world has become subject to more violent and more frequent shocks that impact these choke points.
13:52This is a tenanted farm that we rent.
13:55The crisis in the Strait of Hormuz is also having a big impact on farmers and that could affect the
14:03cost of our food.
14:05Caroline Harriot is a farmer in West Sussex and a regional chair of the National Farmers Union.
14:12It's a mixed rotation of lots of different crops, wheat, barley, grass.
14:18Caroline also produces beef, milk and lamb for our supermarkets.
14:25She relies on diesel to run her farm machinery.
14:30Unfortunately, the fuel price increase has come at a time when we're super busy.
14:35In the winter, you won't be on your land because it's too wet.
14:38But in the spring, with these fantastic conditions we've got now, this is time for putting our seeds in for
14:44our next crop.
14:44So, yes, we'll be using a lot of fuel. It's come at a very difficult time for farmers.
14:52But that's not all.
14:54Around a third of the world's fertiliser trade that travels by sea goes through the Strait of Hormuz.
15:00And right now, hardly any is getting through.
15:04That's pushing up the price British farmers are paying for theirs.
15:09Luckily, we'd bought the fertiliser that we're using now, last year, and that cost us £330 a tonne.
15:16Now, if we went to buy the same fertiliser, it would be £550 a tonne.
15:23It's a massive impact for anybody that didn't have it in store that has got to buy it now.
15:28And for us going forward, our barns are going to be empty of fertiliser.
15:34We're going to have to buy some new fertiliser.
15:37And we've got to make a decision, what are we going to grow this winter?
15:40What can we afford to grow?
15:42We're halfway through this crop and we've got to feed it.
15:46So, we have no option.
15:47You can't just leave it there because you're not going to have a viable crop at the end of the
15:51day.
15:53What are you really worried about going forward, long term, if things don't improve?
15:57Farmers, global volatility, the uncertainty.
16:00We're in Ireland.
16:01We've got shy on 70 million people to feed.
16:04We need to know that we've got stocks of wheat and barley.
16:08We need to grow good crops and we need to ensure that we have that fertiliser at a price
16:14which means that the end product, we get a profit on.
16:20For now, many farmers are taking the hits and absorbing price rises for things like fuel and fertiliser.
16:27But unless costs reduce, they may well have to start passing them on and the price of food could rise.
16:43The energy shocks having an even bigger impact on companies producing crops indoors.
16:50This is 50,000 square metres or five hectares.
16:53We've got four greenhouses exactly the same size on this site all interconnected.
16:58The Greenhouse Growers is one of the UK's biggest producers of tomatoes and cucumbers.
17:05John Swain oversees three sites, including this one in Cambridgeshire.
17:10Our whole site produces about 30 million cucumbers a year.
17:1330 million?
17:1330 million cucumbers a year.
17:14And we can only manage that because we've got supplementary lighting in here.
17:18There's 6,500 light fittings in this block and we use that to extend the day length,
17:23to make sure that the plant gets the light energy that it needs and enables us to get those really
17:27high yields.
17:30British growers supply around one in five of the cucumbers and one in six of the tomatoes we eat.
17:39Because of our climate, most are produced in heated greenhouses.
17:48Oh, wow. That's incredible. It's good, isn't it? It looks like it goes on for miles.
17:55It does. Hundreds of metres, anyway.
18:00Despite investing in the latest green technology to maximise efficiency,
18:05this company still has to use a vast amount of energy.
18:10The bills are enormous.
18:12Our energy costs are in the millions per year.
18:15It's enough energy for a small-sized town.
18:18Renewable energy can't meet all of the needs here and the facility relies on gas.
18:24There's no energy price cap for businesses like this,
18:27so when the gas price rose at the start of the war, the impact was immediate.
18:33The day-ahead gas price, which is a measure of how much gas costs
18:36and how much we'll pay on a daily basis, that doubled overnight.
18:40So that really did scare us.
18:46John now faces a dilemma.
18:48If the cost of energy rises further, can the company still afford to grow tomatoes and cucumbers?
18:56We've gone through our most expensive period and the crop is just starting to harvest now.
19:01We've got to face a decision if energy costs continue to increase.
19:05Do we stop production at some point?
19:07That's a really hard decision for us to make.
19:11And extra energy costs in the future might have to be factored into the price the company charges.
19:19So the cost of tomatoes, cucumbers going up is a possibility?
19:23I think it's a real possibility that the cost of goods will go up
19:27because the costs of energy have gone up and energy underpins everything we do
19:31and those costs have to be absorbed because nobody wants to be making a loss
19:35because you can't run a business like that.
19:41When it comes to food prices, it can take time for us to see the effects in the supermarket.
19:46One thing we can look at is when there have been previous shocks to global food prices,
19:51it looks like it takes about a year for the full effect of that to pass through
19:55to the price you pay in the shops in the UK.
19:59Some of the latest estimates from the industry are that food price inflation
20:02could be as high as 10% by the end of this year, for example.
20:05So in recent years, we have seen food price inflation of 5% or 6%.
20:09People will have noticed that when they've gone to the shops
20:11and it could be even more than that by the end of this year.
20:16Although the UK gets very little gas from the Middle East,
20:19the price we pay for oil and gas depends on the global market.
20:24Those prices have risen and that's creating pressure on inflation here.
20:31It's just hit 3.3%. To keep inflation on or around its 2% target, the Bank of England can
20:38change interest rates.
20:40I think the Bank of England is going to be in a tough place.
20:43Their aim, their target, is to set interest rates to keep inflation at 2%.
20:50Inflation is going to be much higher than that over the rest of this year.
20:54I think interest rates might well be going up in the second half of this year.
20:58Higher interest rates are good for savers.
21:01Hello!
21:01Hiya, how are you doing?
21:02Yeah, good. Can I come in?
21:03But not so good if you're trying to get a mortgage.
21:08There you come. All right.
21:10How long have you been here for?
21:12So, it'll be five years this year, in June.
21:15Iona lives in Mansfield with her teenage daughter, her dog and her two cats.
21:22When she bought this house, she fixed her mortgage for five years,
21:25when interest rates were at record lows.
21:29That deal's ending and while she knew her payments were right,
21:33the best deal she's been offered will cost much more than she'd hoped.
21:38How much are you currently paying for your mortgage and how much will you be paying?
21:41So, it was a bit of a shock because the payment went up from £720 a month to £1,020
21:49a month.
21:50So, quite a big increase. £300 a month.
21:53Wow, what was your reaction?
21:56Gobsmacked.
21:57I always expected that it would increase anyway because, you know, there's no...
22:02When I did get the mortgage, initially it was a very low rate that was on,
22:07but initially it was a massive shock.
22:09I think because it happens so far away, I probably didn't appreciate at the time
22:16how much, you know, what is happening thousands of miles away
22:19would have a direct impact on my life and my family's life.
22:27Iona now says the rise means she's looking at ways she can cut back in the future.
22:33I guess I'd be changing my shopping habits.
22:35This is making me rethink everything from top to bottom, just to make sure.
22:39Because my priority is keeping a roof over my head and my daughter's head as well.
22:47The average interest on a five-year fixed-rate mortgage is now 5.7%, up from 4.95% before
22:56the war began.
22:58We've already seen mortgage rates rise pretty sharply and the availability of mortgage products has been cut back.
23:05Markets are pricing in the prospect that the Bank of England will be raising interest rates in the next few
23:10months.
23:10That means the households who are looking to refix their mortgage face substantially higher costs than they would have expected
23:17previously.
23:19Earlier this year, the UK's economy looked to be turning a corner, but the conflict means that's now under threat.
23:27Growth here could be hit harder than in other major economies.
23:31There are two ways in which the UK is particularly vulnerable. One is how we heat our homes.
23:36We have a much higher gas usage than other countries, and gas determines the cost of our electricity, too, for
23:42more of the time than lots of other countries.
23:44That makes us particularly exposed to that gas price shock.
23:47And then the second is that inflation hasn't got back to target.
23:50And that means a shock to prices is even harder for the Bank of England and the government to deal
23:55with.
23:57The international monetary funds already cut its forecast for UK economic growth this year.
24:03Good morning!
24:04From 1.3% to 0.8%.
24:11I think they're correct. And the forecasts are sobering.
24:15Every problem you're worried about gets worse if we have lower growth.
24:21So you're worried about being taxed more, you will be taxed more.
24:24If you're worried about public services, then governments will find it harder to afford these public services.
24:30If you're worried about interest rates, a low growth economy tends also to be a high inflation economy,
24:38which tends to push up interest rates and therefore borrowing costs.
24:42So if we lose the ability to grow yet again because of this external shock, then you will have all
24:50our fragilities are magnified.
24:57This is the third global economic shock in six years after Covid and the Ukraine war.
25:05So far, the good news is it looks like this crisis is somewhat smaller than some of the huge crises
25:10we've seen over the last few years.
25:12The bad news is that it comes on top of those crises.
25:15And that means both for families and for the government, we're in a much less resilient place to deal with
25:20it.
25:23We've got to be more prepared to deal with such shocks rather than just assuming that they don't happen.
25:28That means the public finances have to be run with more buffer room and probably households and firms need to
25:35be more able to cope with adverse circumstances than previously.
25:49Right now, the fragile ceasefire between the US and Iran is holding, but the tense standoff in the Strait of
25:57Hormuz continues.
26:00Iran's still threatening ships in the Strait and the US Navy's blockading Iranian ports and stopping and even boarding some
26:08ships.
26:09Motor vessel Majestic X, we intend to conduct the boarding of your vessel.
26:17Crucial supplies of oil and fertiliser still aren't flowing.
26:21And even if the Strait were to open tomorrow, it would take time for them to get moving again.
26:29Unfortunately, we have not seen the worst.
26:32We're still going to see things get a little bit worse before they get better.
26:37Certain production sites are damaged.
26:39You can't simply go back to where you've come from.
26:42It takes time to re-establish normal.
26:49That means back in the UK, everyone from mortgage payers to tomato growers to shoppers
26:55may have many more months of uncertainty and of trying to cope with rising prices.
27:01It is a worry.
27:03I'm thinking constantly about how I can save money and pinch pennies and, you know, maybe do things differently as
27:09well.
27:09I think you just have to adapt.
27:11I don't have any other choice.
27:13I've got kids.
27:14I've got animals.
27:15So you have to adapt.
27:18We could do with a period of stability across the world because that's what's good for business.
27:25It's vital that farmers can have long-term stability and resilience because this isn't sustainable for the long term.
27:35It's constantly changing.
27:36I think last week alone I had five different suppliers put the prices up.
27:40It's particularly stressful because margins over the years have been coming down and down.
27:44They're squeezed already.
27:46But I have a warehouse full of doors and hopefully it's just a short-term storm that we can ride.
27:52However long the storm lasts, we're likely to be feeling the effects for many more months to come.
28:03Coming up on BBC One, seconds away from a devastating fraud over the phone.
28:09The scam interceptors on the case next.
Comments