We don’t appear to have fully come out the other side of the last ‘cost of living crisis’ with the inflationary effects continuing to linger and sting consumers pockets.
The UK gas price surged after the conflict in the Middle East has intensified with indications that the conflict may last for some time, reminiscent of the surge that plagued the market in the immediate aftermath of the invasion of Ukraine.
Alongside the increase in the price of gas, approximately 20% of global energy supplies pass through the Strait of Hormuz, which has become a chokehold of Iran and is a critical shipping passage between the Persian gulf and the gulf of Oman. The effective closure is expected to cause chaos across markets globally, with potential shocks to food prices further eating into consumers’ pockets and impacting their ability to spend.
The crisis in the Middle East has also bolstered the strength of the dollar, with the GBP/USD exchange rate falling to a three-month low, increasing the cost of imports for businesses in the UK resulting in working capital pressures.
Prior to March, markets had predicted an 80% chance of the Bank of England base rate being cut this month, falling to 30% after recent events have unfolded, with the medium term expectation of two cuts in interest rates throughout 2026 being revised down to one.
The inflationary pressures coupled with potentially higher than forecast interest rates are inevitably going to impact the trading performance of businesses across the UK, as consumers once again seek to adjust their spending habits and businesses face higher borrowing costs.
We are seeing more businesses seeking advice on improving their position through expert refinancing help. With the level of uncertainty at a macro-economic scale at odds with lenders looking for certainty when making lending decisions, it may be worthwhile considering expediting funding plans for 2026. If you would like to discuss your strategic plans with our team who can support in navigating through complex situations, please get in touch.
For more information see articles below.
How will war in the Middle East affect your finances? | UK cost of living crisis | The Guardian
