RE: Going south!4 Mar 2026 08:59
How is the conflict impacting the UK economy now and what could it look like in say three months
We have seen the financial markets take a negative plunge, Lloyds has gone from 104p to mid 90’s, while energy prices are rising significantly, especially with Brent crude at $83 today. All this weakens investor confidence in the UK which will result in lower growth, which is already low. Global financial markets are jittery overall, which feeds into UK pension values, investments, and business confidence.
What does this mean for the UK - markets will remain volatile, business investment and consumer confidence could stay weak — slowing spending and growth.
Wholesale gas prices in the UK have jumped rapidly by as much as 30% or more already. This means higher electric costs when the caps are revised in the summer and expected to be about £2,500, a significant rise from where it is now.
Higher oil prices raise petrol/diesel costs at the pump. It should take weeks to filter through but the greedy people that run them are already putting prices up. All our local pump prices have jumped up 4p already.
With rising energy costs inflation will definitely increase. Food prices will increase again due to higher manufacturing costs as well as moving them around. Poor old working man is going to see any rises in his back pocket eroded away.
Increased energy costs will put between .5 to 1% on inflation alone. An odd observation for you all, hot cross buns in our local supermarket are £1.19 for six, a year ago they were a £1. Next year, £1.50?
Inflation could remain above the Bank of England’s 2 % target longer than expected, no surprise there then. More pain for even longer.
The good old fiscal watchdog (OBR) is now telling us the conflict, not a war, can and will most likely have a “very significant” impact on growth and inflation outlooks. They’ve already cut growth forecasts for 2026 due to higher energy costs and slower investment.
With higher inflation it means the Bank of England is less likely to cut interest rates soon. That is going to spoil someone’s plans. It also means borrowing costs for households and businesses will stay higher than expected, restraining spending. More financial pain for the working man. Can we see more strikes for higher pay to offset the conflict?
And what will all this look like in 3-6 months if the conflict is still continuing? We all know how long Gaza has been going on for, it could be chicken feed compared to this.
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