A series of indicators and sentiment surveys point to some choppy economic waters ahead caused by a combination of inflationary pressures that are embedded in the UK economy and the closure of the Strait of Hormuz. Firms say they expect to increase prices in May, a strategy that’s not available to UK gaming operators.
The latest barometer from data company GfK has shown that UK consumer confidence fell in April to its lowest level since October 2023.
Underscoring the ripple effects of the Middle East crisis on Britain, surveys of business activity and consumer confidence highlighted the conflict as a key factor behind a marked deterioration in outlook. At the same time, three separate business surveys have highlighted rising cost pressures on companies and expectations that prices will increase in the months ahead.
Neil Bellamy, consumer insights director at GfK, said rising fuel prices and the prospect of higher energy costs were a constant reminder to consumers of the inflationary shock caused by the war. With GfK’s consumer confidence index, which has tracked sentiment since 1974, dropping four points to -25 Bellamy noted: “While the Gulf crisis is intensifying pressures, much of the current strain reflects earlier domestic cost increases.” Further signs of mounting inflationary pressure emerged as the war unsettles energy markets and disrupts global supply chains.
The S&P Global purchasing managers’ index showed that firms operating in the UK service sector experiencing their biggest jump in costs between March and April since 1996. Manufacturing firms also reported sharp increases in raw material prices, while a separate survey by the CBI found that sentiment among UK industrial companies fell at the fastest rate since the start of the Covid pandemic. In a further economic indicator, the Office for National Statistics reported that more than a quarter of firms in its weekly business conditions survey expect to raise the prices of their goods or services in May – the highest proportion since January 2023.
