Economists have issued a stark warning that the ongoing war in the Middle East could force 200,000 households into poverty. The National Institute of Economic and Social Research (NIESR) reports that rising energy bills, petrol prices, and food costs are set to strain family finances across the United Kingdom.
Economic Slowdown and Its Impact
Experts suggest that an economic slowdown will undermine salary growth and could lead to higher unemployment, reducing incomes and lowering living standards throughout the UK economy. Adrian Pabst, an economist at NIESR, told The Telegraph: 'The new energy price shock caused by the war in the Middle East highlights old vulnerabilities.'
Pabst added: 'People in the bottom half of the income distribution will see their incomes fall due to lower economic activity and higher unemployment. Moreover, lower-income households typically spend a larger share of their budget on energy and food, so rising energy costs and food inflation will erode their living standards beyond the effect of the shock on their incomes.'
Call for Government Support
Pabst emphasized: 'The combined effect will push at least 200,000 additional households into absolute poverty unless the government provides targeted support.' This figure would be added to the five million Britons already estimated to be living on less than £1,500 per month after housing costs.
Strait of Hormuz Concerns
According to specialists, around 100,000 of the newly impoverished households will have only between £500 and £1,000 to spend each month. NIESR also predicts that if the Strait of Hormuz remains closed, the UK could face a recession and inflation exceeding five percent. In such a scenario, unemployment could peak at 5.8 percent, a level not seen since 2014.
Long-Term Outlook
While NIESR's predictions cover only the 2026/27 financial year, Mr. Pabst and his colleagues expect the situation to worsen as the economic impact of the war continues to pressure UK family finances.
