UK faces £35bn hit as Middle East energy crisis looms
UK faces £35bn hit as Middle East energy crisis looms
A think tank warns the UK could slip toward recession as the Middle East energy shock drains up to £35bn from the economy over the next two years.
A leading UK think tank, the National Institute of Economic and Social Research, warned that the energy shock from the Middle East could shave about £35 billion off the UK economy over the next two years, even in a best-case scenario. The warning comes as markets watch tensions that could tighten energy supplies and push up prices.
The group cautioned that the economy could slip into recession this year if the crisis lasts longer than expected. In the best case, growth would still be slower in 2026 and 2027 than previously forecast, underscoring how closely Britain's fortunes are tied to global energy dynamics.
Analysts say the shock would hit both households and businesses, lifting energy bills, squeezing consumer spending, and complicating government fiscal planning. The analysis adds urgency to debates on energy diversification, efficiency, and potential policy responses to shield the recovery. While numbers are uncertain, the message is clear: the energy crisis in the Middle East has tangible risks for Britain’s outlook, reminding policymakers to prepare for a more volatile energy landscape.
The figures, while contingent on how long the disruption lasts and how markets respond, spotlight the broader vulnerability of an economy now balancing post-pandemic recovery with geopolitical shocks. Officials and business leaders are watching closely, weighing contingency plans from hedging strategies to targeted support for households and firms most exposed to price spikes.
