Red Sea Tensions: Impact on Global Shipping and Economy

Attacks by Iranian-backed Houthi militants in the Red Sea have disrupted shipping in the Suez Canal, impacting around 15% of global sea trade and potentially derailing plans to cut interest rates in Europe. While the disruptions have not yet significantly affected the European economy, prolonged trade disruption could lead to increased inflation and impact firms and the economy. The situation may prompt companies to consider alternative, more secure supply routes, but these options are likely to come with higher costs.