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 ...
		HMRC receives over 25,000 winter fuel payment scam reports HMRC has seen a sharp rise in reports of winter fuel payment scams, with pensioners being warned to ignore messages requesting repayments or bank details. The recovery process is real, but the winter fuel payment scam is simp...
		Thousands of taxpayers are missing out on tax refunds Many people miss out on tax refunds because they haven't taken the time to review their tax details after a job change, a pension update, or a coding mistake. A quick HMRC refund check can help identify any overpaid tax and s...
		Now the State Pension age is rising to 67, what will you get and when? The State Pension age is increasing to 67, meaning some individuals will need to wait a bit longer to claim. The positive aspect is that pension payments are also on the rise, and the rules are quite simple to understand ......
		War, ceasefires and the effect on inflation War can push up prices fast, while ceasefires often calm them without fixing everything. In this blog post, I want to look at the effect on inflation, from energy prices and supply chains to wages, the cost of living, and wha...
		A new tax year is here, and with it comes a raft of changes The start of the new tax year in April 2026 has brought a wave of changes, but for business owners and the self-employed, this isn't just background noise; it directly affects how you operate, report and plan ......
		Statutory Sick Pay changes: What both employers and employees need to know Statutory Sick Pay is changing this month to make SSP easier to access and faster to receive. More low-paid employees will qualify, and payment will start from the first full day off sick. Employers will need to update payrol...
		Companies House accounts filing changes are paused for now Companies House accounts filing changes are on hold for now, so there is no need to rush into new software for the paused April 2027 plans. However, identity checks, fees and the CATO closure are still moving ahead, so keep a...
		Penalties for MTD for Income Tax become clearer for 2026 From what I've read, penalties for MTD for Income Tax are starting to look much less mysterious. The main message is simple: you get a penalty if you miss a filing deadline, collect points, and pay late if the tax is overdue....

Other bloggers you may like ...
		Bad chatbots vs good chatbots: what your potential customers actually notice Posted by Steffi Lewis on https://www.yourbot.uk Many businesses like the idea of having a chatbot on their website. It feels modern, helpful, and a bit 'AI-powered'. But there is a world of differen ...
		Time saving workflows and systems for landlords Posted by Sarah Hannaford on https://blog.sarahpasolutions.co.uk Getting your workflows and systems right can make a significant difference for landlords. With the right routines, admin automation tools, and a bit o ...
		HMRC Taking A Good Look At Savvy Online Sellers Posted by Helen Beaumont on https://blog.essendontax.co.uk HMRC's new data sharing initiative, which aligns with the OECD's global objective to tackle tax evasion, has been met with mixed reactions from online ...
		Hi, I'm Davina, and this is why I do things differently Posted by Davina Farrer on https://blog.joindavina.co.uk If there's one thing to know about me, it's that I haven't followed the normal path. I have a free spirit, love adventure, and believe life is for liv ...