A report published on August 3, 2026, warns that a military conflict with Iran could bring UK economic growth to a standstill. The analysis, conducted by the Centre for Economics and Business Research (CEBR), highlights the vulnerability of the UK economy to external shocks, particularly through energy prices and global trade routes.
The report estimates that a sustained conflict in the Middle East could push oil prices above $120 per barrel, leading to higher inflation and reduced consumer spending. The UK, as a net importer of oil, would be disproportionately affected compared to other major economies. The CEBR suggests that such a scenario could halve the UK's growth rate from its current forecast of 1.5% to just 0.7% in 2027.
In addition to energy costs, the report points to disruptions in global supply chains, particularly for manufactured goods and pharmaceuticals, which could further dampen economic activity. The UK's financial services sector, which relies heavily on international trade and investment, would also face significant headwinds.
The report comes amid heightened tensions between Iran and Western nations over its nuclear program. While the UK government has not indicated any immediate military action, the CEBR urges policymakers to consider contingency plans to mitigate the economic impact of a potential conflict.
