Bloomberg Daybreak: Europe Edition

Chancellor Rachel Reeves says Britain shouldn’t sacrifice its principles for more favorable trading terms with the US, as she discusses the UK's economic future. The chancellor sat down with Bloomberg's Head of Economics and Government Stephanie Flanders after issuing her Spring Statement on Tuesday, as she seeks to convince markets and voters that Britain’s public finances are resilient enough to weather the fallout from the conflict in Iran and rising global energy prices.
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Your morning briefing. All the news you need to start your day.

On today's podcast:

(1) The US sent conflicting messages about how long a war with Iran might last as Israel launched new airstrikes on Monday, with the widening conflict reverberating across the Middle East and upending energy markets.

(2) Just three days into the conflict, the Iran war has become attritional. Waves of drone attacks by the Islamic Republic are putting pressure on the defenses of the US and its partners from Bahrain to the United Arab Emirates, depleting weapons stockpiles. The outcome of the fight may depend on which side runs out of munitions first.

(3) The United Arab Emirates and Qatar are privately lobbying allies to help them persuade President Donald Trump to reach for an off-ramp that would keep US military operations against Iran short, according to people familiar with the matter.

(4) Having spent a year attempting to charm and appease Donald Trump, UK Prime Minister Keir Starmer on Monday drew a clear line in the sand: Britain will not join its closest military partner in offensive action against Iran.

(5) Oil extended gains as the US and Israel stepped up their war against Iran, while Tehran threatened a full closure of the Strait of Hormuz and hit the American embassy in Riyadh with drones.

(6) Chancellor of the Exchequer Rachel Reeves will use her economic statement on Tuesday to lament that the world is awash with uncertainty. And she’ll try not to contribute any more of it — by saying as little as possible.

(7) Emirates and Etihad Airways will resume limited operations as the carriers seek to ease some of the congestion caused by the airspace closing in the wake of the ongoing Iranian attacks.

Podcast Conversation: Polymarket Geopolitics Wagers Reach Record as Iran War Escalates
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Your morning briefing. All the news you need to start your day.

On today's podcast:

(1) President Donald Trump said the bombing campaign against Iran will continue until its objectives are achieved, calling on the nation’s leaders to capitulate as a report indicated at least one top official in Tehran sought to resume nuclear talks with the US.

(2) Iran's Leader Ayatollah Khamenei’s demise has potentially seismic consequences for the Middle East and beyond. While it marks the end of an era for Iranians — the majority have only known one leader — for now, as the fighting continues in the Persian Gulf, the Islamic Republic as a system of rule continues to function.

(3) Europe scrambles to react, with the UK allowing the US to make use of British military bases for the specific purpose of destroying Iranian missile depots.

(4) The oil market’s nightmare scenario came true this weekend. European natural gas prices could more than double if shipping through the Strait of Hormuz is halted for one month, according to Goldman Sachs.

(5) Travel chaos extended through the Middle East and beyond, sending airline stocks sharply lower on Monday, as carriers across the Persian Gulf extended blanket flight suspensions, causing major disruptions at some of the world’s busiest airports.

(6) Dubai’s nightmare scenario unfolded Saturday: Defense systems repelling Iranian missiles and drones over its famous skyscrapers, explosions and plumes of black smoke rising out of the city-state’s most celebrated neighborhood.
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The US and Israel began striking targets across Iran, with President Donald Trump urging Iranians to overthrow the government in a conflict that threatens to spiral across the oil-rich Middle East.

“The hour for your freedom is at hand,” Trump said, addressing Iranians in a video posted on Truth Social on Saturday. “When we’re finished, take over your government. It will be yours to take. This will be probably your only chance for generations.”

The military campaign could be a defining moment for Trump, risking a drawn-out regional war that leads to a surge in energy prices and American casualties ahead of mid-term elections this year. Iran quickly responded by firing missiles on Israel and US bases around the region, and countries in the Persian Gulf closed their airspace.

Israel’s military said the campaign would target “dozens of military targets,” and Iran media reported strikes on defensive and civilian sites, including more than 50 people dead in a strike on a school in Hormozgan, in the south of the country. Several large explosions were reported in the capital, Tehran.
Bloomberg's David Gura and Christina Ruffini lead our team coverage in this instant reaction podcast.
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