The ongoing conflict surrounding Iran has sparked fears of a new wave of inflation in the United Kingdom, according to a report citing Al Jazeera. The impact is already visible in European stock markets, with the UK's FTSE 100 index dropping by about 200 points, or roughly 2 percent, and Germany's DAX index falling by around 2.3 percent.

Market analysts suggest that investors are now factoring in the possibility of interest rate hikes due to inflation concerns. The Bank of England is expected to make decisions on this matter in the coming weeks or months. Higher interest rates would make borrowing more expensive for both businesses and homeowners.

Since the crisis began, yields on UK government bonds have also risen significantly, raising concerns that the government’s day-to-day financial management could become more difficult.