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\t\tThe UK economy has been hit by the Iran war. Daniel Berehulak\/Getty Images)\t<\/p>\n\t\t\tTuesday 24 March 2026 3:18 pm\n\t\t\t<\/p>\n
\t\tThe UK economy has been hit by the Iran war. Daniel Berehulak\/Getty Images)\t<\/p>\n
The war in the Middle East is \u201cstalling growth\u201d in the UK economy, fresh data has shown, as economists warned that a \u201cpronounced recession\u201d will come if energy prices stay high. <\/p>\n
A monthly survey of business activity<\/a> across the country has suggested that there was a slowdown in output as well as a fall in both domestic and international orders, with the war already taking a toll<\/a> on the private sector.\u00a0<\/p>\n S&P Global\u2019s purchasing managers\u2019 index (PMI) showed that businesses suffered from market turmoil<\/a> in March, with cost pressures rapidly accelerating on the month.\u00a0<\/p>\n Reacting to the PMI result, Morgan Stanley economist said the UK would face a \u201cpronounced recession\u201d later this year if monetary policy did not ease and commodity prices remained high over the coming months. <\/p>\n Chris Williamson, chief business economist at S&P Global, said the war was \u201cstalling growth while driving inflation sharply higher\u201d. <\/p>\n \u201cOutput growth across manufacturing and services has slowed to a crawl as companies blamed lost business directly on the events in the Middle East, whether through heightened risk aversion among customers, surging price pressures, higher interest rates, or via travel and supply chain disruptions,\u201d Williamson said.<\/p>\n The flash PMI remained in positive territory at 51, just above the 50-figure threshold for neutrality in output.\u00a0<\/p>\n The PMI estimate for manufacturing output skimmed the threshold at 50.1.\u00a0<\/p>\n Researchers said manufacturers\u2019 input prices<\/a> index, which measures costs for firms, rose by 14 points in March.\u00a0<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tOil crisis to \u2018push UK into recession\u2019 after growth flatlines<\/a><\/p>\n \t\t\t\t\t\t It was the biggest month-on-month increase for the sector since October 1992 after Black Wednesday, the sterling crisis when the government was forced to withdraw currency from the European Exchange Rate Mechanism.\u00a0<\/p>\n Researchers said the cost pressures on manufacturers were \u201cespecially severe\u201d. Problems could be compounded by a fall in demand over the coming months. Company bosses reported a small increase in export orders due to possible stock-piling by customers.\u00a0<\/p>\n Economists \u2018struck\u2019 by bad UK economy results<\/p>\n S&P Global analysts also said respondents in its survey of around 650 services firms and 650 manufacturers reported longer wait times for raw materials as ships were diverted away from the Middle East and had to travel around South Africa.\u00a0\u00a0<\/p>\n Service providers also reported a rise in cost pressures while business expectations dropped to its lowest level for nine months.\u00a0<\/p>\n Capital Economics\u2019 chief UK economist Paul Dales said the flash PMI showed the conflict in the Middle East was \u201calready going a long way to boosting inflation and extinguishing GDP growth \u2013 and this is just the start.\u201d<\/p>\n \u201cWe are a bit struck by how rapid the moves have been.\u00a0<\/p>\n
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