KPMG warned that ongoing conflict in the Middle East is disrupting UK supply chains and projected Britain’s economic growth to slow to 0.8% in 2026.
The firm’s forecast reflects rising energy costs and shipping delays affecting British manufacturers and retailers.
Executives surveyed by KPMG cited uncertainty over trade routes through the Red Sea and Gulf regions as a drag on planning.
The 0.8% growth projection represents a downgrade from earlier estimates issued before the latest escalation of regional fighting.
Small and medium enterprises appear particularly exposed to input price volatility linked to the conflict.
UK policymakers are monitoring inflation pass-through as firms adjust pricing to absorb higher logistics expenses.
KPMG’s analysis joins a growing body of corporate forecasts tying Middle East instability to slower British expansion.
Business leaders said contingency routing and inventory buffers are becoming standard responses to prolonged supply uncertainty.
KPMG tied Middle East conflict disruptions to a projected 0.8% UK growth rate for 2026 as supply chains falter.
British firms face higher logistics and energy costs linked to instability around Red Sea and Gulf shipping lanes.
KPMG forecasts 0.8% UK growth for 2026 as Middle East conflict disrupts trade.
Supply chain delays linked to the Middle East war are feeding into slower UK output.
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Sources:
UK Business News Today: 26 May 2026 | Economy, Markets & Insolvencies