FTSE 100 fell 1.4% Tuesday as Middle East tensions spooked markets, with Donald Trump warning U.S. operations in the region could last weeks. Investors also parsed UK corporate earnings and the delayed Spring Budget, which delayed key fiscal details. European peers slumped too: Germany’s DAX dropped 2.3%, France’s CAC 40 fell 1.6%, amplifying global risk aversion.

Trump’s blunt remarks about UK military support strained bilateral ties. He criticized Prime Minister Keir Starmer for initially withholding Royal Air Force bases for strikes against Iran, calling the lack of cooperation "sad." Starmer later reversed course, agreeing to host U.S. defensive operations—a shift Trump deemed insufficient: "He should have helped… he should have."

UK firms navigated mixed results. Greggs PLC reported £171.9 million profit, down 9.4% year-on-year, citing a hot summer that hurt foot traffic. Meanwhile, Keller Group PLC announced a £100 million buyback after 5.9% revenue growth, and Aberdeen Group pushed back its £1 billion inflow target to 2027 amid wealth management headwinds.

Market volatility underscored broader economic fragility. With the pound trading at $1.3322—its weakest since 2022—investors fear prolonged geopolitical instability and delayed budget clarity could hamper growth. Analysts warn that without decisive policy moves, the UK’s recovery risks stalling.