(The Guardian, Nils Pratley, 26 March 2026)
The energy price shock caused by the war in Iran adds to an already critical situation for British businesses, which before the conflict already had the highest electricity prices among G7 countries, with projected increases of 10-30% for electricity and 25-80% for gas according to Cornwall Insight, worsened by the fact that about a third of companies renew contracts at the beginning of April and immediately suffer the effect of price hikes without any protection.
Chancellor Rachel Reeves has ruled out a widespread support package for businesses, focusing instead on “targeted” measures for the poorest households, while the plan being prepared to offer savings of up to 25% on bills to 7,000 manufacturing companies from next April appears stuck between SIC code definitions and inter-ministerial funding discussions, leaving companies to face the crisis alone.
This episode serves as a further reminder to the government that the absolute priority of the industrial strategy must be to reduce energy costs for businesses, as supported by last month’s CBI and Energy UK report, because high energy costs are holding back the UK economy and require a strategic reset rather than temporary interventions funded by other taxpayers.
Rising costs for businesses
“Projections from energy consultancy Cornwall Insight are high for both electricity and gas. For the former, increases of 10-30% are expected, for the latter 25-80%. The ranges are wide because there are no price caps for businesses. Contracts are more or less a negotiation between supplier and customer.”
Immediate impact on contract renewals
“The timing of the increases in oil and gas market prices is also terrible. About a third of businesses renew contracts at the beginning of April to coincide with the start of the fiscal year, and the effect of higher wholesale prices is felt immediately.”
Exclusion of widespread aid
“Chancellor Rachel Reeves has ruled out a widespread support package for consumers; the effort is instead aimed at finding a ‘targeted’ scheme for the poorest households if needed. So businesses, inevitably, will be left to fend for themselves. This is today’s fiscal reality.”
Need for an industrial strategy on energy costs
“For the long term, however, this episode is another reminder to the government that the absolute priority of its industrial strategy must be energy costs. The central thesis that ‘high energy costs are holding back the UK economy’ is almost indisputable. The debate will not disappear. Other countries pursue a more strategic energy policy.”
Consequences on business sentiment
“Here’s a taste of today’s corporate energy market from Adam Berman, policy and advocacy director at Energy UK: ‘Liquidity in the market is already hit. Suppliers’ ability to offer long contracts is running out and prices change hourly. There are cases of offers made in the morning and withdrawn by lunchtime. There is nervousness on both sides. Some business customers are signing contracts shorter than three months where they would normally opt for a year.’”
Consumer confidence in the UK “plummets” due to the war in Iran.
(The Guardian, Heather Stewart, 26 March 2026)
Consumer confidence in the UK has plummeted since the start of the war in Iran according to new research from the British Retail Consortium, with 64% of respondents expecting the economy to worsen in the next three months versus 11% anticipating improvement, bringing the balance to -53% compared to -20% the previous month.
British adults surveyed by Opinium on behalf of the BRC between 10 and 13 March were also much more pessimistic about their personal finances, with a negative balance of -17 compared to -6 in February, due to the sharp rise in energy prices caused by the effective closure of the Strait of Hormuz and attacks on infrastructure in the region.
Helen Dickinson, chief executive of the British Retail Consortium, said consumer confidence has collapsed because the Middle East conflict has raised the prospect of higher inflation in the coming months, just as the economy was beginning to turn a corner, and the global rise in energy prices is particularly unwelcome for businesses and households.
Collapse of consumer confidence
“Consumer confidence in the UK has plummeted since the start of the war in Iran according to new research from the British Retail Consortium. 64% of respondents expected the economy to worsen in the next three months. Only 11% thought it would improve. The resulting balance of -53% was significantly lower than the -20% reading a month earlier.”
Pessimism about personal finances
“British adults surveyed were also significantly more pessimistic about their personal financial prospects, with a negative balance of -17, down from -6 in February.”
Statement from the BRC chief executive
“Helen Dickinson, chief executive of the British Retail Consortium, said: ‘Consumer confidence has collapsed as the Middle East conflict has raised the prospect of higher inflation in the coming months. Just as the economy was beginning to turn a corner, the global rise in energy prices is particularly unwelcome for businesses and households.’”
Analysts downgrade growth forecasts
“Analysts have quickly revised down their growth forecasts for the UK in 2026 amid fears that higher energy prices – already evident at the petrol pumps – will lead nervous consumers to cut back on other spending.”
Stable inflation in February before the war
“The news of the sharp drop in consumer confidence came after official data showed the inflation rate remained steady at 3% in February, before the war upended expectations.”
(Excerpt from the newsletter by Giuseppe Liturri)
