UK Economy Braces for 'Fairly Marked Slowdown' as Iran Conflict Intensifies
The escalating Iran conflict is expected to have a significant impact on the UK's economic growth in Q2 2025, according to economists who forecast a 'fairly marked slowdown.'
The main channels of impact are higher oil and gas prices, which will increase production costs and reduce household spending power. Additionally, disruption to shipping routes in the Middle East could delay imports and raise freight costs, particularly for energy-intensive industries.
The UK's growth rate could slow to around 0.1% quarter-on-quarter in Q2 2025, down from an estimated 0.4% in the first quarter, according to a recent note from a leading economic consultancy. The note describes the slowdown as 'fairly marked' but stops short of predicting a recession, citing resilience in the services sector.