- Britain's services sector experienced a significant slowdown in March, with the S&P Global UK services PMI dropping to 50.5, its lowest in 11 months, though still indicating growth.
- Businesses largely attributed the deceleration to geopolitical tensions in the Middle East, specifically the US-Israel conflict with Iran, which is stifling both business and consumer spending.
- They said prevailing uncertain conditions are eroding public confidence, delaying investment decisions, and led to the fastest decline in export sales since April 2025.
- The conflict has directly impacted business costs by disrupting energy infrastructure and shipping routes, pushing up fuel and transportation expenses and accelerating input cost inflation.
- Economists warn that these factors heighten the risk of 'stagflation' – rising inflation alongside slower economic growth – with one suggesting a recession is likely if the conflict persists.
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