What's happened
UK households are cutting back on fuel, food and non-essential spending amid rising costs from the Middle East energy shock. Mortgage activity has risen as households lock in rates, while businesses pause big investments; confidence remains fragile and policy action is urged to ease cost-of-living pressures.
What's behind the headline?
live analysis
- The data point to a broad shift in consumer and business behavior as costs rise. Households are proactively adjusting budgets, with fuel purchases down and eating-out spending easing.
- Mortgage markets have hardened in Q1 as households seek to lock in rates, suggesting expectations that rates may not fall soon.
- Businesses are delaying non-essential investment, especially where energy costs bite, while infrastructure and project-finance demand remains resilient.
- This combination signals persistent strain on household finances and a fragile recovery path, even as some sectors show structural demand for energy and infrastructure investments.
- Expect policymakers to face pressure to ease cost pressures through targeted support and energy price containment measures.
How we got here
The tension from the Middle East energy shock has driven up energy and input costs, prompting households to adjust spending and remortgage activity. NatWest and Bank of England data show a rush in remortgage applications and cautious business investment, particularly in manufacturing, against a backdrop of uncertain energy prices.
Our analysis
The Independent reports NatWest data showing a surge in remortgage activity in March and cautious business investment. The Guardian and The Independent also reference Which? findings on consumer confidence hitting a low amid cost-of-living pressures and rising food and fuel costs. All sources cite energy shocks from the Middle East and their impact on prices and spending.
Go deeper
- How long will mortgage activity stay high as rates rise?
- What policy steps could ease the pressure on households?