Families told to brace for £440 hike in energy bills this summer - as World bank and IMF warn Iran crisis could trigger a global recession

Energy bills could jump by £440 this summer, amid warnings the Iran war will trigger a global recession.

The Resolution Foundation said families should brace themselves for average bills to jump to £2,100 in July if the war continues to hit energy supplies.

It said that even in a 'best case scenario' in which oil and gas supplies return to normal in the coming days the price cap is likely to rise by at least £130.

Lalitha Try, an economist at the think tank, said: 'The cost of living crisis never ended for millions of households, and now a new price shock is on the way.'

The warning came amid a blizzard of grim economic news about the impact of the war.

In a rare joint statement on Wednesday night, the World Bank, International Monetary Fund and International Energy Agency (IEA) said the impact of the war would be 'substantial, global and highly asymmetric, disproportionately affecting energy importers'.

The institutions called for global cooperation to mitigate the economic fallout caused by shortages and disruption to supply chains and travel, which they said was likely to include inflation, interest rate hikes and lower growth.

In a statement, they said: 'The resulting market volatility, weakening of currencies in emerging markets, and concerns about inflation expectations raise the prospect of tighter monetary stances and weaker growth.'

Rachel Reeves said it 'makes no sense' to help better off families with soaring energy bills

The Food and Drink Federation said food prices could jump by up to 10 per cent even if the war ends in the next few weeks.

International Energy Agency chief Fatih Birol said the world is 'heading towards a major, major disruption'.

He said that shortages of key supplies like jet fuel and diesel that are already damaging Asian economies would hit Europe this month.

'April will be much worse than March,' he told the In Good Company, arguing that Western economies like the UK are still getting supplies from tankers that were at sea when the war broke out.

Rachel Reeves issued her own recession warning on Wednesday.

Hinting at an impending downturn, the Chancellor said the economy, which grew by just 0.1 per cent in the final quarter of last year, is set to get 'weaker' in the face of a global energy crisis.

Ms Reeves angrily rejected claims the Treasury is set to benefit from the war. She said increased takings from VAT on petrol and the energy windfall tax would be more than wiped out by higher borrowing costs and falling tax receipts as the economy enters a downturn.

But Ms Reeves and Sir Keir Starmer both suggested there will be no help on energy bills until the autumn – and that even then it is likely to be restricted to those on benefits and very low incomes.

Ms Reeves said it made 'no sense at all' to help better off families with their energy bills, adding: 'We're looking at ways in which we can support people based on their household income.'

The Chancellor also played down the idea of cancelling a 5p rise in fuel duty which is due to phased in from September, although the PM insisted it remained 'under review'.

Until now, ministers have been anxious not to blame Donald Trump for the looming economic crisis.

But Ms Reeves told BBC Radio Two she was 'angry' with the US President.

'I'm angry that Donald Trump has chosen to go to war in the Middle East - a war that there's not a clear plan of how to get out of. It's why we didn't want to enter this,' she said.

'Yes it will have implications for our economy, I get that. We are monitoring very closely what's happening - trying to bring the oil and gas into the UK so that those supplies are there and get the prices down. We are monitoring the situation very carefully.'

She said government borrowing costs had 'gone through the roof' since the war started, with some experts saying the damage could blow a £12 billion hole in the public finances.

And she suggested that the already sluggish economy is set to slow further.

'Revenues from income tax and capital gains are likely to come down because the economy is likely to be weaker,' she said.

At an emergency press conference in Downing Street, the Prime Minister insisted that the government would provide a safety net for the poorest.

'I want to reassure the British people that no matter how fierce this storm we are well-placed to weather it and we have a long-term plan to emerge from it a stronger and more secure nation,' he said.

Shadow chancellor Sir Mel Stride accused ministers of damaging the economy by pushing up taxes and banning new drilling in the North Sea.

'Labour blame everyone but themselves,' he said. 'Britain is weaker because of Rachel Reeves and Ed Miliband's choices. Tax hikes and Labour's net zero obsession are driving up costs and hitting families in the pocket.

'Reeves offers nothing but more borrowing, more taxes, more welfare - and working people are paying for Labour's spending spree.'