1 hour ago
13
The average UK household is on track to lose £2,400 in real disposable income by the end of 2027, according to new analysis from the Centre for Economics and Business Research (CEBR). The culprit: the cascading economic fallout from the Iran war, which has sent energy prices spiraling and left wage growth stuck in neutral.
Published in late August 2026, the CEBR’s projections break down to roughly £1,100 lost per household this year and a further £1,300 expected to vanish from family budgets in 2027. Across all UK households, the total damage clocks in at an estimated £70.4 billion in lost income.
How the Strait of Hormuz broke British budgets
The economic pain traces directly back to the escalation of US-Israeli strikes on Iran in late February 2026, which triggered the closure of the Strait of Hormuz. About a fifth of the world’s oil passes through that narrow waterway on any given day.
The results were immediate and brutal. Diesel prices surged 35% in the weeks following the conflict’s escalation. Petrol jumped 19%. Those increases didn’t stay at the pump; they rippled into food prices, transport costs, and virtually every sector that depends on moving physical goods.
Growth forecasts downgraded, mortgage pain ahead
The National Institute of Economic and Social Research (NIESR) has downgraded its UK growth forecast for 2026 to 0.9%, a reduction of 0.5 percentage points attributed directly to the conflict.
The Bank of England’s own estimates add another dimension to the squeeze. An additional 1.3 million households are expected to face increased mortgage payments by the end of 2028 as fixed-rate deals expire and homeowners roll onto higher rates.
Public finances aren’t escaping unscathed either. The conflict is estimated to cost the Treasury roughly £8 billion annually through a combination of higher debt interest payments and reduced tax receipts.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
English (US) ·