The conflict in the Middle East has pushed energy prices sharply higher, but the implications for UK inflation will depend on the scale and duration of the shock as well as its propagation through firms' costs, prices, margins, and wages. This column uses new survey data from UK firms to provide early evidence on how business expectations are responding. Firms currently expect higher prices and lower margins to be the main margins of adjustment, especially among energy-intensive firms. Consistent with this, firmsa?? expectations for their own prices and costs have risen since the war began. Wage and employment impacts remain more muted but could evolve over time.

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11 May 2026

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VoxEU

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https://cepr.org/voxeu/columns/how-uk-firms-are-responding-war-iran-early-evidence-decision-maker-panel

This Blog is published under the centre's Growth programme.

This publication comes under the following theme: UK productivity and policy