"Growth lost momentum in the second half of 2025 as consumers, anxious about tax increases and rising unemployment, held back. There was hope, spurred on by various indicators, that they'd start 2026 with renewed vigour. But the official data, while volatile and prone to revision, suggested the economy stalled in January."
"A rise in petrol prices of 6% in less than a fortnight not only hurts pockets but also risks hitting consumer confidence. The longer and more extensive the military campaign, the greater the damage. Higher energy prices threaten bigger household bills for everything from gas and electricity to food and furniture shipped from overseas."
"A resurgence in inflation, even one that is very modest compared to what we saw during the Ukraine war risks hitting spending, growth and pushing up unemployment further - especially so if greater price pressures derail the chances of further interest rate cuts."
"If this conflict is sustained, economists are muttering about growth being perhaps just half of the 1.1% the Office for Budget Responsibility predicted for this year - or even less."
The UK economy faced significant headwinds in early 2026 despite government hopes for improved growth. Consumer spending declined in January as households remained anxious about tax increases and unemployment. Weak performance in hospitality and recruitment sectors indicated broader economic stagnation. Geopolitical tensions triggered a 6% petrol price increase within two weeks, threatening household budgets and consumer confidence. Rising energy costs risk higher bills for utilities, food, and imported goods, potentially reigniting inflation and derailing interest rate cuts. While improved energy efficiency provides some resilience, sustained conflict could halve predicted growth rates. Economists warned of severe economic damage if energy prices continue escalating.
Read at www.bbc.com
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