UK Economy Shrinks as Iran Energy Shock Hits Growth
The UK economy is expected to contract 0.1% in April as the delayed impact of Iran's energy price shock weighs on businesses and consumers, with official data due Friday.
The UK economy is set to shrink in April as the delayed effects of Iran's energy price shock begin to materialize, with economists forecasting a 0.1% contraction. Official figures are due on Friday.
The contraction follows a boost at the start of the year, but analysts at Deutsche Bank and other institutions warn that the war in Iran has driven up energy costs, squeezing businesses and consumers. Higher fuel and heating bills are reducing disposable income, while political uncertainty around the Labour Party's leadership is adding to the drag. For oil and energy traders, the UK's economic weakness signals potential demand destruction in a major consuming nation, which could weigh on Brent and other crude benchmarks. Check NowPrice's fuel page for the latest UK petrol and diesel prices.
Looking ahead, traders will watch Friday's GDP release for confirmation of the contraction and any revision to prior months. The Bank of England's next policy decision will also be scrutinized for how it balances inflation risks from energy costs against a weakening economy. Further data on consumer spending and industrial production in May will provide clues on whether the downturn deepens.