Middle East energy crisis could wipe £35bn off UK economy – even in best-case scenario, think tank warns
The National Institute of Economic and Social Research (Niesr) warns that the Middle East energy crisis could reduce the UK economy by £35bn, even under the best-case scenario of a swift resolution to the conflict. Higher energy prices and inflation are expected to persist, leading to slower economic growth and potential interest rate hikes by the Bank of England. The projections challenge the government's economic growth ambitions, with growth forecast to slow to 0.9% in 2026 and 1% in 2027.
- ▪The UK economy could be £35bn smaller in 2026 and 2027 due to the Middle East energy crisis, even if the conflict ends quickly.
- ▪Niesr forecasts UK economic growth will slow to 0.9% in 2026 and 1% in 2027, down from 1.4% in 2025.
- ▪The Bank of England may raise interest rates to 4% in July and potentially to 5.25% if inflationary pressures persist.
- ▪Inflation in the UK rose to 3.3% last month and is expected to remain elevated due to the conflict.
- ▪Niesr's previous growth forecasts for 2026 and 2027 were 1.4% and 1.3%, respectively, before factoring in the crisis.
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NewsUKUK PoliticsMiddle East energy crisis could wipe £35bn off UK economy – even in best-case scenario, think tank warnsImpact of Donald Trump’s Iran war a ‘serious blow’ to Keir Starmer’s economic hopesKate Devlin Whitehall Editor Wednesday 29 April 2026 00:01 BSTBookmarkCommentsGo to commentsBookmark popoverRemoved from bookmarksClose popover{"translations":{"comments":"Go to comments","share":"Share","copyLink":"Copy link","bookmark":"Bookmark","removeBookmark":"Remove bookmark"},"showComments":true,"showBookmark":true,"articleId":"b2966540","articleMeta":{"url":"https://www.independent.co.uk/news/uk/politics/uk-economy-energy-crisis-middle-east-niesr-b2966540.html","title":"Energy crisis could wipe £35bn off UK economy – even in best-case scenario"}}Starmer tells Britons ‘don’t…
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