The fragile ceasefire in the Middle East has brought little relief to UK households, as the economic fallout from the conflict continues to drive up the cost of energy, mortgages and food. Richard Partington, the Guardian’s senior economics correspondent, warns that the poorest are being hit hardest.
Just six weeks ago, there was cautious optimism about the UK economy. Markets expected interest rate cuts, making mortgages cheaper. But after the US and Israel attacked Iran, oil prices surged when Tehran closed the Strait of Hormuz, cutting off 20% of the world’s oil supply. Petrol prices rocketed, and knock-on costs are filtering through to consumers.
“The price of petrol has rocketed. Mortgage costs have risen pretty dramatically. Some people’s house purchases have fallen through because some banks have pulled deals,” Partington says, warning of more bad news to come. “If a supermarket is distributing food around the country, it has a fleet of lorries that it needs to fill up with diesel. It needs to recover the cost. So what does it do? It puts up prices.”
The cost of living crisis, which began in 2022, has deepened. Official data shows four in 10 adults struggle to pay energy bills, and the Joseph Rowntree Foundation reports 3.8 million people in the UK experience destitution, unable to afford to stay warm, dry, clean, clothed and fed. The government’s finances are also under pressure, with debt near 100% of GDP.
While de-escalation in the Middle East would be positive, particularly for those living under bombardment, the economic consequences are likely to persist. Decisions made in the coming days and weeks will continue to have ripple effects on UK households.
