UK business activity has slowed to its weakest level since September, as rising costs linked to the Iran war weigh heavily on companies, according to a closely watched survey.
Data from the S&P Global Purchasing Managers’ Index showed the UK’s composite PMI fell to 51.0 in March, down from 53.7 in February, signaling only marginal growth and falling short of expectations.
The slowdown is being driven largely by a sharp surge in input costs, particularly for fuel, transportation, and raw materials. Manufacturers reported the steepest increase in costs since 1992, highlighting the scale of inflationary pressure hitting businesses.
The conflict in the Middle East has disrupted supply chains and pushed energy prices higher, feeding directly into production expenses across multiple sectors. As a result, companies have raised their own prices at the fastest pace in nearly a year, adding to concerns about persistent inflation.
Business confidence has also weakened, with firms reporting lower expectations for future output and continued job cuts. Analysts warn that the UK economy is facing growing stagflation risks, where slowing growth coincides with rising prices.
The figures present a challenge for the Bank of England, which must balance efforts to control inflation with the need to support economic growth. Policymakers have already warned that inflation could rise further in the coming months as energy driven cost pressures persist.
Overall, the survey underscores how geopolitical tensions are increasingly spilling into economic performance, with the Iran conflict amplifying cost pressures and weakening momentum across the UK business sector.
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