UK households tighten belts as Iran war fuels price surge
UK households tighten belts as Iran war fuels price surge
UK shoppers pull back on spending as energy costs rise amid the Iran conflict, with EY forecasting near-stagnant growth and inflation climbing toward 4% in 2026.
In the wake of the Iran conflict, UK households are tightening belts as energy costs and everyday prices rise, prompting countryside and city shoppers alike to curb discretionary spending. A notable drop in travel-related purchases signals cautious budgets and a broader retrenchment across households.
EY’s latest outlook warns that UK consumer spending could stall almost entirely, projecting just 0.3% growth in 2026 while inflation climbs toward 4%. The combination of higher prices and slower income growth is shaping a cautious consumer mood and a fragile outlook for early next year.
Analysts point to banks’ activity as a telltale sign of the strain. Barclays has reported a dip in credit card spending in April, with travelers among the hardest hit, illustrating how Britons are prioritizing essentials over leisure as uncertainty persists for households facing higher energy bills and fluctuating prices.
Economists emphasize that the environment remains volatile: energy prices stay a critical driver, supply chains face ongoing frictions, and households are bracing for potential shocks in the months ahead. Policymakers will be watching inflation trends closely as they weigh the balance between supporting growth and keeping price increases in check.
