Britain's economy faces its most severe blow from the Iran war, with the OECD downgrading UK growth forecasts more than any other advanced economy. Prime Minister Keir Starmer's pledge to build resilience failed to reassure investors as gilt markets showed renewed volatility, highlighting Britain's particular vulnerability to energy price shocks.

Economists point to several structural weaknesses that left the UK exposed before the conflict began. The country's heavy reliance on imported gas, combined with stalling growth in services and construction sectors, created a fragile economic backdrop. Inflation was already running at 3% in February, and the Bank of England now faces difficult decisions about monetary policy as energy prices surge.

The war's impact extends beyond immediate price pressures. OpenAI halted UK data centre expansion plans due to energy costs, while mortgage holders face higher borrowing costs as gilt yields spike. The Royal Institution of Chartered Surveyors reported new buyer enquiries at their lowest since 2023, suggesting the housing market is already feeling the strain.