War in Middle East threatens UK living standards growth, as markets brace for energy shock – business live
Introduction: War in Middle East threatens UK living standards growth
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The dust is settling after Rachel Reeves’s spring forecast statement yesterday, which showed that growth will be weaker than hoped this year while unemployment will be higher.
While the chancellor claimed the UK could ‘beat the forecasts again’, economists are concerned that the ongoing Middle East crisis will hurt the economy, and household finances, badly.
The Resolution Foundation have just released their overnight analysis of the Office for Budget Responsibility’s forecast.
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The good news? The UK is set for a “decent”, one-off increase in living standards this year, and a bumper rise for lower-income families.
-
The bad news? A fresh energy price shock risks wiping out these gains.
-
The big picture? The medium-term picture for living standards remains bleak
According to Resolution’s calculations, living standards for typical working-age families are set to grow, by £300, over the coming year (between 2025-26 and 2026-27).
Lower-income households are set for a bigger bump in living standards, up 3.9% or £800. This would be the second strongest year for living standards in the past two decades for poorer families.
BUT if energy prices don’t drop, then all these gains will be wiped out.
If recent rises in the price of oil and gas were to be sustained they could add around a percentage point to inflation and £500 on to typical annual energy bills, Resolution say.
The energy price cap could raise by £500 in June says the Resolution Foundation. That puts everything else from the Spring Forecast in the shadows. Watch: https://t.co/KynP3Cq9mR
— Sam Coates Sky (@SamCoatesSky) March 3, 2026
Ruth Curtice, chief executive at the Resolution Foundation, says:
“The immediate economic outlook for Britain is highly uncertain, with yesterday’s forecasts already looking out of date, while the living standards picture for the rest of the Parliament is very lopsided.
“This coming year is set to be a decent one for living standards, and a bumper one for poorer families, as wages and benefit support rise above the level of inflation. But a fresh energy price shock risks puncturing this good news.
The agenda
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9am GMT: Resolution Foundation event on the spring forecast
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9.00am GMT: eurozone services PMI for February
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9.30am GMT: UK services PMI for February
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10am GMT: Eurozone unemployment report for January
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2.45pm GMT: US services PMI for February
Key events
Oil up despite Trump offer to escort oil tankers through strait of Hormuz
The oil price is climbing again, as Donald Trump’s offer to have the US navy escort tankers through the strait of Hormuz fails to calm markets.
Brent crude is up 3.2% this morning at $84.08 a barrel, up from $72.48/barrel on Friday night before the Iranian conflict began.
Trump yesterday tried to get traffic moving through the strait of Hormuz – through which 20% of oil and gas would normally travel.
The US president wrote on his Truth Social platform:
“If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.”
“No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.”
Markets fall in Asia-Pacific again
Asia-Pacific stock markets have continued to tumble today, on growing fears that the US-Israel war on Iran will cause an energy shock.
Japan’s Nikkei was down 3.6% in late trading, while South Korea has plunged by 12%.
Stocks continued to fall despite Donald Trump’s offer to have the US navy escort tankers through the strait of Hormuz.
The sell-off was so sharp that trading in both South Korea and Thailand was briefly suspended.
While the near-term picture for UK living standards is positive, the picture for the remainder of the Parliament is far bleaker.
The Resolution Foundation projects that after next year, the incomes of typical working-age families are projected to fall by 0.5 per cent, or £150, for the remaining two years of the Parliament.
CEO Ruth Curtice says:
“With wage growth set to tail off, the living standards picture for the rest of the Parliament is bleak. This should remind policy makers of the need to both navigate near-term uncertainty and support productivity-based economic growth over the medium term. That is the only way to meaningfully lift living standards throughout Britain.”
Introduction: War in Middle East threatens UK living standards growth
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The dust is settling after Rachel Reeves’s spring forecast statement yesterday, which showed that growth will be weaker than hoped this year while unemployment will be higher.
While the chancellor claimed the UK could ‘beat the forecasts again’, economists are concerned that the ongoing Middle East crisis will hurt the economy, and household finances, badly.
The Resolution Foundation have just released their overnight analysis of the Office for Budget Responsibility’s forecast.
-
The good news? The UK is set for a “decent”, one-off increase in living standards this year, and a bumper rise for lower-income families.
-
The bad news? A fresh energy price shock risks wiping out these gains.
-
The big picture? The medium-term picture for living standards remains bleak
According to Resolution’s calculations, living standards for typical working-age families are set to grow, by £300, over the coming year (between 2025-26 and 2026-27).
Lower-income households are set for a bigger bump in living standards, up 3.9% or £800. This would be the second strongest year for living standards in the past two decades for poorer families.
BUT if energy prices don’t drop, then all these gains will be wiped out.
If recent rises in the price of oil and gas were to be sustained they could add around a percentage point to inflation and £500 on to typical annual energy bills, Resolution say.
The energy price cap could raise by £500 in June says the Resolution Foundation. That puts everything else from the Spring Forecast in the shadows. Watch: https://t.co/KynP3Cq9mR
— Sam Coates Sky (@SamCoatesSky) March 3, 2026
Ruth Curtice, chief executive at the Resolution Foundation, says:
“The immediate economic outlook for Britain is highly uncertain, with yesterday’s forecasts already looking out of date, while the living standards picture for the rest of the Parliament is very lopsided.
“This coming year is set to be a decent one for living standards, and a bumper one for poorer families, as wages and benefit support rise above the level of inflation. But a fresh energy price shock risks puncturing this good news.
The agenda
-
9am GMT: Resolution Foundation event on the spring forecast
-
9.00am GMT: eurozone services PMI for February
-
9.30am GMT: UK services PMI for February
-
10am GMT: Eurozone unemployment report for January
-
2.45pm GMT: US services PMI for February
