UK Economy Faces ‘Very Significant’ Risks Amid Middle East Crisis
The Office for Budget Responsibility (OBR) has warned that the UK economy could suffer a “very significant” hit due to the ongoing Middle East conflict, which has disrupted energy markets and driven up costs. Growth forecasts for 2026 have been downgraded, and uncertainty remains high. :contentReference[oaicite:4]{index=4}
Growth and Inflation Outlook
The OBR downgraded the UK’s growth forecast to roughly 1.1% for this year, citing the conflict’s impact on energy prices, market volatility, and investor confidence. Despite lower headline inflation, higher gas and oil prices threaten inflationary pressure. :contentReference[oaicite:5]{index=5}
Markets and Monetary Policy
The Bank of England’s path toward lower interest rates may be delayed as yields rise and markets reprice risk. Gilt yields have climbed, complicating fiscal planning and monetary easing expectations. :contentReference[oaicite:6]{index=6}
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