A new wave of economic anxiety is sweeping across the United Kingdom as businesses report mounting pressure from the ongoing crisis in the Gulf, with fears that the fallout will drive inflation higher and disrupt supply chains for months to come. According to a major survey conducted by the British Chambers of Commerce (BCC), a vast majority of firms across the country are already experiencing or anticipating significant impacts linked to the conflict involving Iran and wider instability in the Middle East. The findings point to a growing sense that geopolitical tensions are no longer distant risks but immediate drivers of domestic economic strain.
The survey, which included responses from more than 800 companies, found that 80 per cent of businesses reported either current disruption or expected consequences from the conflict. Energy prices and shipping costs were the most frequently cited concerns, reflecting the UK economy’s exposure to global commodity markets and international trade routes. More than half of respondents said they were already directly affected, while a further quarter expect the impact to reach them in the near future. These figures suggest that the economic shock is both widespread and still unfolding.
Manufacturing firms appear to be among the hardest hit, with 68 per cent reporting existing disruption and an additional 23 per cent anticipating further effects. The sector’s dependence on imported materials, energy-intensive production processes, and complex logistics chains has left it particularly vulnerable to fluctuations in fuel prices and transport costs. Businesses across multiple industries have reported preparing for sustained volatility, including higher input prices, supply chain interruptions, and increased costs for raw materials, all of which threaten to erode profit margins and consumer purchasing power.
One of the most striking findings of the survey is the expectation of rising energy costs over the coming year. Around 75 per cent of firms anticipate increases, with 43 per cent forecasting hikes of more than 20 per cent. Such projections raise the risk that inflationary pressures could intensify across the broader economy, especially if companies pass on higher costs to consumers. In this scenario, households could face a renewed squeeze on disposable income, compounding existing challenges from elevated food and housing costs.
Business leaders have warned that the effects of the crisis are already visible in daily operations. William Bain, head of trade policy at the British Chambers of Commerce, described the situation as one in which firms across the country are grappling with higher energy bills, shipping disruption, and rising raw material costs. He emphasized that even if diplomatic efforts succeed in reducing immediate tensions, the economic consequences are likely to persist well beyond any formal end to hostilities. According to this view, the global economic environment has entered a period of sustained instability rather than a temporary shock.
The broader context adds further weight to these concerns. The BCC has highlighted that many UK companies are particularly exposed to energy volatility because commercial energy users do not benefit from the same price protections available to households. This structural vulnerability means that fluctuations in global energy markets can be transmitted rapidly into business operating costs, increasing uncertainty and complicating investment planning. In response, the organization has urged the government to consider measures such as funding renewable levies through general taxation in order to ease pressure on electricity bills.
At the macroeconomic level, analysts are already revising down expectations for UK growth as the effects of the energy shock become clearer. Forecasts from KPMG suggest that GDP growth could fall to around 0.8 per cent in 2026, down from 1.4 per cent the previous year. The slowdown is attributed to a combination of higher energy costs, rising inflation, and the likelihood of tighter monetary policy from the Bank of England as it attempts to contain price pressures. Weakness in the labour market is also expected to amplify the impact, reducing household spending power and dampening overall economic activity.
Economists note that while the current situation bears some resemblance to previous energy crises, particularly the shock triggered by the Russia-Ukraine conflict in 2022, there are important differences. According to KPMG’s chief economist Yael Selfin, Europe’s direct exposure to gas supply risks is lower than in earlier crises, reducing the likelihood of physical shortages. However, she warns that the broader transmission of instability through global commodity markets and disrupted supply chains could produce a more diffuse but still significant economic impact. This means that even sectors not directly linked to energy imports may feel indirect pressure through rising input costs and logistical delays.
The ripple effects are already being felt across industries such as transport, hospitality, and agriculture, where rising fuel prices directly affect operational costs. Haulage companies in particular report operating under intense pressure, with higher diesel costs and volatile freight rates threatening long-term viability for smaller operators. In hospitality and farming, where margins are often tight, even modest increases in energy expenses can have disproportionate effects on profitability. Many businesses describe themselves as being in “survival mode,” reflecting the severity of current conditions.
Beyond immediate business concerns, there is growing apprehension about the potential long-term consequences for investment and economic confidence. Prolonged uncertainty in energy markets tends to discourage capital expenditure and hiring, as firms delay expansion plans until conditions stabilize. This hesitation can feed into slower productivity growth, weaker wage increases, and reduced tax revenues, creating a broader drag on national economic performance.
The BCC has warned that without policy intervention, the combined effects of geopolitical instability and energy market volatility could entrench inflationary pressures in the UK economy for an extended period. While government officials have so far emphasized resilience and diversification of energy sources, business leaders are calling for more targeted measures to shield firms from sudden cost spikes. The debate now centers on how to balance long-term energy transition goals with short-term economic stability.
As the Gulf crisis continues to generate uncertainty across global markets, the UK finds itself exposed not through direct conflict but through the interconnected nature of modern energy and trade systems. For businesses already facing tight margins and weak demand, the prospect of sustained cost increases represents a significant challenge. Whether policymakers can mitigate these pressures will likely play a decisive role in shaping the country’s economic trajectory in the months ahead.
