War with Iraq 'would cost the UK 230,000 jobs'

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War with Iraq would cost 230,000 UK jobs as companies cut costs and slashed investment budgets, an economic forecasting unit warned yesterday.

A "short, sharp conflict" in Iraq would see economic growth tumble to just 1.6 per cent, Experian Business Strategies said, compared with its central forecast of 2.5 per cent. But a separate report from the Economist Intelligence Unit said there would only be a "modest" impact on the world economy from a quick victory.

Neil Blake, Experian's research director, said the price of oil could rocket to nearly $40 (£25) a barrel, leading to higher costs for industry. "The result [is] reduced output growth and layoffs right across manufacturing and the private services industries.

Unemployment would surge by 100,000 to 1.08 million, he said. The 230,000 figure includes 130,000 of new jobs that would have been created without the outbreak of war.

London would be the worst affected, suffering 47,000 job cuts against a non-war scenario of 10,000 jobs created.

But the EIU said while oil prices would peak at $35 to $40 it believed the oil producers' cartel Opec would increase its output to fill the shortfall.