Monday 18 May 2026 9:31 am
UK businesses are stalling investments as a result of the Middle East conflict
Over half of UK firms said they have halted investment and hiring plans due to the economic fallout of the Iran war, contributing to supply chain pressures and higher energy and fuel costs. According to new research from accountancy and advisory firm BDO, 57 per cent of 500 businesses with revenues between £10m and £500mn, said the tensions are “among their biggest challenges” as they “grapple with the impact of the conflict in the Middle East. 60 per cent of mid-sized companies said they plan to halt or reduce investment plans as they wait for the situation to settle and stabilise, soaring to nearly 70 per cent in both the retail and tech sectors and 67 per cent in financial services. BDO said this is “concerning,” as mid-market companies generate more than £1.8 trillion in revenue and are a core contributor to the UK’s economy, accounting for one in three private-sector jobs. The firm added that these pressures “could leave companies making difficult trade-offs behind the scenes” as they navigate the economic shock of the conflict in the Middle East, including stalling hiring plans and reducing headcount. Alongside staff squeezes, nearly 40 per cent of businesses said they are also considering raising customer prices, amid concerns about material costs, delays, stock shortages, and suppliers folding. Business leaders, BDO said, are seeking additional support from the government in case the conflict and its effects on firms worsen.‘Bizarre soap opera’ for company directors Many firms are looking for measures, including dedicated supply chain distribution support, such as new grants created for businesses that have been materially impacted, as well as transport and fuel cost relief. “Now more than ever, it is crucial that the government is listening to the mid-market and helping them address these challenges head on, whether it be through supply chain disruption support or targeted energy cost relief. Addressing these challenges head on could be the key to providing the stability needed to reignite the UK’s economic growth,” BDO partner Richard Austin said.BDO also found that over 30 per cent of firms are prioritising UK-based suppliers, a move that could boost UK manufacturing. “There are bright spots in this research for UK manufacturing. However, mounting pressures around energy, fuel costs and supply chains, which were issues affecting businesses even before the conflict in Iran, are only adding to the sustained feeling of uncertainty amongst business leaders,” Austin said.Kenny MacAulay, CEO of Accountancy Software firm Acting Office, stated that skyrocketing energy, fuel, and staff costs are “ preventing ambitious companies from making long-term strategic investments.” “Against the backdrop of a grinding Middle East Crisis and a government descending into a bizarre soap opera, it’s a tough time to be a company director,” he added.
