#uk-economic-vulnerability

#uk-economic-vulnerability

Ongoing conflict in the Middle East continues to disrupt global markets and oil prices, adding a persistent layer of uncertainty for UK firms. This geopolitical instability is driving higher cost pressures and intensifying concerns around supply chains and energy security, all of which are critical factors in strategic business decision making.

Nearly half of firms (48%) expected turnover to grow over the next 12 months in the first quarter of the year, up from 42% in the final quarter of 2025.

Revenue-based finance allows repayments to fluctuate with takings, offering businesses greater flexibility during quieter trading periods. This model is increasingly favored by high street businesses facing financial pressures.

The idea has reportedly gained support from Defence Secretary John Healey and has been discussed in private ministerial meetings in recent weeks, as ministers search for ways to bridge a widening fiscal gap without breaking Labour's tax and borrowing pledges.

After 46 days of rising prices, the cost of both petrol and diesel across the country has finally begun to drop very slightly. Wholesale prices are still lower, so we're hopeful there will be further reductions amounting to several pence a litre in the coming days.

Sterling fell by 0.5% against the dollar, dropping below $1.33, as the US currency strengthened due to a flight to safety. The dollar index increased by 0.3%.

Sanjay Raja, the chief UK economist at Deutsche Bank, stated, 'The UK's disinflation story is set for another twist. The good news is that the CPI is expected to fall in the coming months. The bad news? Higher energy prices appear likely to significantly raise the CPI during the summer, creating yet another spike in the inflation trajectory.'

Energy becoming more expensive globally and the weaker pound means Britain pays even more for those imports. Oil and most commodities are priced in dollars. A softer pound therefore magnifies the impact of rising global prices.