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 ...
		Could AI finally solve the UK productivity problem? For years, UK productivity has been something of an economic headache. Before the financial crisis in 2008, productivity was growing at a much healthier rate, but progress since then has been disappointingly slow ......
		New King Charles 10p coin enters circulation as Britain uses less cash There is something rather fascinating about the arrival of the new King Charles 10p coin. More than seven million are being released into circulation, meaning they should soon start appearing in our change ......
		Device theft and banking fraud: Why your phone security matters Most of us still think about mobile phone theft in terms of losing an expensive piece of technology. It is inconvenient, frustrating and potentially costly to replace, but I feel the bigger risk today is what that phone gives...
		HMRC's automatic MTD sign-up starts in September HMRC has confirmed an important change for sole traders and landlords who should already be using Making Tax Digital for Income Tax but have not yet registered. From September 2026, HMRC's automatic MTD sign-up will begin ......
		Cybersecurity for businesses: Why falling behind is becoming a bigger risk Cybersecurity has been a business concern for years, but the nature of the threat is changing quickly. Artificial intelligence, increasingly sophisticated cyberattacks, and even developments in quantum computing mean business...
		The cost of doing business is changing how companies operate There has been plenty of discussion about the rising cost of living, but I think we also need to pay closer attention to the rising cost of doing business. Companies are dealing with many of the same inflationary pressures as...
		Key employment law changes employers need to know this August Employment law continues to evolve, and recent government consultations and tribunal decisions provide several important reminders for UK employers. From workplace monitoring technology and disciplinary procedures to unfair d...
		Self employed taxpayers warned about class 2 NIC record errors HMRC has spotted errors in Class 2 NIC records affecting some self-employed people who did not register properly. The good news is that fixes are being rolled out, and some taxpayers may be able to top up gaps later. It is wo...

Other bloggers you may like ...
		The modern fear of being forgotten in a world thats always on Posted by Steffi Lewis on https://www.yourping.uk In the 21st century, we live in a world that never really switches off. Messages arrive instantly, shopping arrives the next day, television streams e ...
		Where do corporate visitors to Milton Keynes stay? Posted by Emily Freeman on https://blog.shortstay-mk.co.uk Corporate visitors to Milton Keynes need space, privacy and easy city access. This post explains why serviced apartments beat hotels and home‑shares. ...
		Building professional relationships: How to create connections that last Posted by Dave Cordle on https://blog.davecordle.co.uk Building professional relationships can make a huge difference throughout your career. The people you meet along the way can become colleagues, mentor ...
		The hidden risk of working from home alone: Why daily check-ins matter Posted by Steffi Lewis on https://www.yourping.uk Working from home alone has become the norm for millions of people across the UK, offering flexibility, fewer commutes and a better work-life balance. ...