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.
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