Rising costs, slowing growth: How war is hitting the UK economy right now

CREATED BY ROGER EDDOWES Published: 09/04/2026 @ 09:00AM #UKeconomy #energybills #inflation #businessconfidence #economicoutlook

The risks of war to the UK economy are very real; they can quickly impact energy bills, inflation, and business confidence. My blog post today explains why both businesses and households should care, and why a fragile economy makes resilience and planning more important than ever ...

The risks of war to the UK economy are evident, with rising costs and slowing growth

It's very easy to underestimate the risks until they start impacting daily expenses, investor confidence, and economic growth. When conflict pushes up energy prices, as is currently happening due to events in the Middle East, the effects are felt well beyond the battlefield, which is why the country's economic outlook can darken quite rapidly.

One of the most immediate channels is inflation!

If oil, gas, and shipping costs increase, businesses face higher operating expenses, and households pay more to live, which then contributes to broader price rises. That can leave the Bank of England with a tricky decision: support demand or keep rates higher for longer.

There is also a quieter but very real effect on business confidence. Firms tend to delay hiring, investment, and expansion when the impact of the global conflict is unclear, and that hesitation can become self-reinforcing. For companies trying to do proper risk planning, uncertainty is not just inconvenient; it is costly.

These risks also stretch into public finances!

Higher welfare costs, weaker tax receipts, and slower growth can leave the government with less room to manoeuvre. If government spending increases to cushion the shock, taxpayers may end up bearing more of the burden in subsequent years, further straining the system.

Supply chains don't need to be directly affected for the damage to be felt. A conflict that disrupts trade routes, commodity flows, or even insurance markets can impact supply across many sectors, from manufacturing to food production.

This is especially awkward when growth is already fragile, which it currently is. A weak domestic outlook means the country has less capacity to absorb another shock, so what might once have been a temporary inconvenience can turn into a more lasting burden.

For households, the practical outcome
is usually simple enough!

Higher energy costs, a tighter shopping basket, less spending on nights out, takeaways, and entertainment subscriptions, cancelled holidays abroad, and much more uncertainty about mortgages, savings, and wages.

For businesses, that pressure is even greater, as they must plan for demand, funding, staffing, and rising costs simultaneously. Now, business risk planning shifts from a boardroom exercise to an essential survival tool.

The most challenging part is that no battle plan survives contact with the enemy, and war rarely follows a strict timetable. Markets might improve for a while as material costs fall, then shift again with the next headline, retaliation, or supply shock. Oil tankers moving one day do not guarantee they'll be moving the next.

That is why the risks of war to the UK economy cannot be judged by a single day's market movement; they should be regarded as a continuous test of resilience over time.

This isn't just an distant issue unfolding on the global stage. It's already impacting higher energy bills, increased prices, and slower growth here in the UK. Businesses are paying more, households are feeling the pressure, and confidence is beginning to waver.

Government policy must adapt quickly and realistically, or these increased costs won't be temporary; they'll become permanent, leaving us all with consistently higher bills.

Until next time ...

ROGER EDDOWES
Join our mailing list! Click here and be one of the first to know when we publish a new blog post!

Share the blog love ...

Buffer Facebook Twitter Linkedin Pinterest WhatsApp #UKeconomy #energybills #inflation #businessconfidence #economicoutlook

About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach. Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.

More blog posts for you to enjoy ...
		Autumn Budget 2026: property and savings tax changes With the Autumn Budget now behind us, attention is turning to what the announcements will mean in practice. Among the measures worth a closer look are the property and savings tax changes, which affect landlords, savers and a...
		Autumn Budget 2026: breathing space for businesses, but is it enough? The Autumn Budget 2026 has given businesses something they have been hoping for: a little breathing space. After a difficult period of rising costs, tax pressures, and economic uncertainty, the Chancellor's latest announcemen...
		Get our Autumn Budget 2026 summary The economic backdrop for the Autumn Budget 2026 remains challenging. Rising inflation, energy costs and borrowing pressures continue to strain public finances. Chancellor John Healey faces difficult decisions on taxation and...
		Autumn Budget 2026 predictions: Why planning ahead matters more than guessing tax changes With the Autumn Budget happening on 28th October 2026, speculation about possible tax changes is gathering pace. From business taxation to pensions and personal finances, the Budget predictions are giving people plenty to thi...
		Inheritance Tax on pensions: What the 2027 rules mean for your family The rules surrounding Inheritance Tax on pensions are changing in 2027, and anyone hoping to leave their pension savings to loved ones should be aware of what lies ahead ......
		The 60% Tax Trap: Why Earning More Could Leave You Worse Off Most people assume that earning more means taking home more money. Unfortunately, the 60% tax trap reminds us that the UK tax system isn't always straightforward. For higher earners approaching £100,000, a pay rise or bonus c...
		Budget tax changes: What could they mean for businesses and investors? As the next budget approaches, speculation about tax changes is gaining momentum. The Chancellor faces a difficult balancing act: managing public finances, encouraging economic growth, and avoiding further pressure on busines...
		Working lunch tax rules: When do sandwiches become a tax problem? There is something wonderfully British about gathering colleagues around a table, ordering a few sandwiches and calling it a productive meeting. After all, everyone needs lunch, and discussing business while eating seems perf...

Other bloggers you may like ...
		How Emotional Intelligence helps you make better choices Posted by Dave Cordle on https://blog.davecordle.co.uk Every day, we make hundreds of choices, often without much thought. Some are straightforward, while others involve difficult conversations, unexpected ...
		How YourPING Group Mode check-ins work Posted by Steffi Lewis on https://www.yourping.uk For many charities, community groups and social enterprises, keeping in touch with those they support is an important part of everyday life. But manag ...
		What I look for during a property viewing that the photos don't show me Posted by Sarah Hannaford on https://blog.sarahpasolutions.co.uk Property photographs can make almost any home look wonderful. Clever angles, bright lighting and a little creative furniture placement can make rooms ...
		The power of the follow-up: Don't let opportunities slip through the cracks Posted by Davina Farrer on https://blog.joindavina.co.uk How many times have you met someone, had a brilliant conversation, exchanged details and then ... nothing? Life gets busy, work takes over, and before ...