The UK Recovery Is Already Being Choked by the Energy Shock

NatWest’s latest UK macro update argues that the Middle East conflict is beginning to show up in real economic data, weakening what had been an early-stage recovery. 

• Business sentiment deteriorated in March, with UK PMI data showing weaker activity and a sharp rise in input costs driven by fuel, energy and supply-chain disruption.
• Consumer confidence has also fallen, threatening retail momentum just as households face renewed inflation pressure.
• NatWest warns that even a contained conflict could keep inflation elevated through higher fuel and energy costs, while a broader escalation would significantly worsen the growth outlook.

If the conflict drags on, the UK may find itself pulled back into the familiar bind of weaker growth and stickier inflation.