Back in the headlines: Middle East tensions flare as Iran war fallout bites economies and energy security. Experts flag a fragile regional outlook.
British firms expect to ease price increases as energy-driven costs fade, while manufacturing activity shows a rebound. Bank of England watchfulness continues as inflation risks persist and rate decisions loom.
The OECD has warned the Iran war and closure of the Strait of Hormuz have weakened the global outlook, cutting growth forecasts and driving higher energy, fertilizer and transport costs. Humanitarian agencies are reporting severe supply-chain delays and soaring freight costs that are reducing aid deliveries and hitting poorer countries hardest.
Japan’s export volumes have increased by about 4% year over year, while imports rose modestly. The Finance Ministry notes a growth in the trade surplus in March, signaling resilience after shocks from global tariffs and Middle East energy concerns. Japan is rerouting energy and adjusting production to mitigate policy shifts and supply risks.
Inflation has risen to 3.3% in March as fuel costs jump amid Middle East tensions. BoE is holding rates at 3.75% while weighing energy-price shocks and growth risks. NatWest reports first-quarter profit, while Santander completes TSB takeover; economists warn policy may tighten if energy shocks persist.
Dubai International Airport has seen a dramatic traffic rebound as airspace disruptions from regional conflict ease, with March passenger numbers recovering from earlier declines. Dubai Airports is expanding flight movements in line with available regional routing capacity.
Updated assessments show 7.8 million South Sudan residents, 1.24 million in Lebanon, and rising numbers in DRC, Yemen, and Gaza facing high to extreme hunger. Conflict, climate shocks, displacement, and funding shortfalls are driving a widening global food-security crisis with famine feared in several areas.
Trump has claimed he has passed a cognitive assessment, while allies and opponents accuse him of political manoeuvring as criticism of his health and approach to foreign policy intensifies across conservative circles and media figures.
Compass has published six-month results showing revenue up 9% at constant currencies, reaching $25 billion, with operating profit rising 12%. The group highlights new contracts worth $4.1 billion and says AI-enabled services are driving client demand for outsourced catering amid regulatory and data-driven needs.
UK firms are grappling with higher energy costs and tax increases amid ongoing Middle East conflict disruptions. The latest BTG Red Flag Alert shows a 36.9% year-on-year rise in companies in critical financial distress in Q1 2026, with hotels, leisure and discretionary sectors hardest hit while some UK-based holidays could benefit from travel disruption overseas.
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.
The CMA reports fuel margins have remained broadly steady since late February, with March showing margins near last year’s high levels. While some retailers have seen elevated margins, the watchdog says the overall picture is consistent with ongoing pressure from Middle East turmoil on wholesale costs. The RAC Foundation estimates drivers have shouldered substantial extra costs across petrol and diesel since the conflict began.
The White House has laid out its rationale as the 60-day War Powers deadline approaches, arguing a ceasefire with Iran effectively stops the clock. Democrats and some Republicans are pushing for a wind-down or congressional authorization, while lawmakers brace for a possible battleground on Capitol Hill ahead of midterm elections.
The UN and aid groups warn that more than 21 million people in Sudan face acute hunger after 1,000 days of conflict, with funding shortfalls risking the suspension of food and nutrition programmes and possibly famine in parts of the country.
The Middle East conflict has pushed up fuel, fertiliser and packaging costs, feeding higher food prices globally. Retailers warn inflation is likely to continue if the war persists, while farmers face rising input costs and potential production cuts.
Vice President JD Vance is on a high-profile tour in Iowa, linking economic messaging with support for Republican candidates. The trip follows a string of public missteps and signals potential presidential ambitions, while party dynamics and polling underline a tense path toward 2028.
Oil prices are lifting inflation pressures while central banks hold rates at current levels. Recent data show jobs strength and firmer services costs, prompting caution on policy paths amid war-linked supply disruption.
Airlines face higher jet fuel costs amid the Iran war, with easyJet warning summer bookings are behind last year while Ryanair and Heathrow report mixed demand. Airlines hedge fuel and adjust fares, while passengers shift to later bookings and longer rail trips.
The U.S. and China have opened a 36-hour summit with talks focused on tariffs, Taiwan, and Tehran’s oil sales, but no substantive agreements have emerged. The Iran conflict continues to shape energy markets and global inflation, limiting any immediate market relief.
Inflation in the UK and US remains under pressure as the ongoing Middle East conflict sustains higher energy prices. UK CPI has fallen to 2.8% in April, but analysts warn this may be a brief respite as fuel and gas costs rise. Producer prices in the US have surged in April, signaling rising costs before they reach consumers.
BRICS foreign ministers conference in New Delhi is ongoing as members push for reform of global governance while clashing over Israel-Gaza war, Iran-UAE tensions, and regional security. India chairs the group for 2026; no joint closing statement has emerged amid conflicting positions.
Israel has instructed legal advisers to consider defamation action against The New York Times and columnist Nicholas Kristof after a May 11 opinion piece alleged widespread sexual abuse of Palestinians by Israeli forces. The Times has defended its fact‑checking and sourcing; Israeli officials and the Israel Prison Service have rejected the claims as "blood libel."
Pay growth has cooled in early 2026 as inflation pressures from energy prices persist. BoE watchers note slower wage deals, while housebuilders warn profits will fall amid higher costs driven by the Middle East conflict. Retail, travel, and housing sectors are all feeling the pinch as uncertainty lingers.
BRICS foreign ministers have convened in New Delhi amid persistent divisions over the U.S.-Israel conflict in the Middle East. India’s chairmanship has highlighted calls for reform of global governance while specific language on Gaza and regional security has faced reservations from some members. Iran has urged condemnation of Western actions, while the UAE and Saudi Arabia are cited as key divisive players.
Export growth across Scotland is being driven by mid‑market industrial and manufacturing firms, with energy, subsea services, engineering and food supply chains posting strong international sales. The latest Export 100 rankings show firms expanding through global demand and long‑term contracts, not domestic expansion, while defence and aerospace are among the advanced markets seen.
Drones attacked the Barakah Nuclear Power Plant area in Abu Dhabi, triggering a fire outside the plant’s inner perimeter. Authorities report no radiological impact or injuries, and investigations are underway. Regional players condemn the strike and pledge to defend sovereignty; Iran-linked groups are cited by officials as potential actors.
The IMF has upgraded the UK’s 2026 GDP growth to 1.0% from 0.8%, citing pre-war momentum while warning the Iran war could dampen activity later in the year. The update follows recent data showing stronger-than-expected Q1 growth, with the IMF cautioning that higher energy prices and political uncertainty could weigh on the outlook.
Official data show the UK unemployment rate has risen to 5% in the three months to March, with pay growth slowing to 3.4% and a sharp 100,000 fall in payroll employees in April. Vacancies have dropped to a five-year low as firms in retail and hospitality curb hiring amid economic and geopolitical uncertainty linked to the Iran war and rising energy costs.
Ofgem has set to reveal the annual price cap for July–September for a typical dual‑fuel household in Great Britain. Cornwall Insight predicts a rise to about £1,850, a 13% increase on April’s cap, with October expected to mirror July’s level due to ongoing supply disruptions and higher wholesale prices.
Thailand is reducing visa-free stays for tourists from more than 90 countries from up to 60 days to mostly 30 days, with some nations receiving 15 days. The move aims to curb crime and unlawful activities linked to foreign visitors, while allowing a single renewal. Authorities say the policy targets offenders, not nationalities, and follows broader border-security measures.
The government has cut import tariffs on more than 100 everyday products and expanded a cost‑of‑living package with a Great British Summer Savings scheme, including free August bus travel for children. Immediate energy relief is not promised, with contingency planning for autumn and winter staying in place.
Airlines have adjusted summer schedules and are temporarily suspending select routes in August–September because jet fuel costs have surged since the Iran conflict closed key shipping lanes. Carriers including American, easyJet and others have reduced seats, delayed route launches or paused services; travelers are being offered refunds or rebooking and face higher fares and fees.
Gas prices have stayed high amid ongoing tensions in the Hormuz Strait and the Iran conflict. Analyses suggest a slow rebound in prices, with travel costs and fuel affecting consumer budgets for the coming months.
The United States and Iran have been negotiating a memorandum of understanding that would extend the current ceasefire by 60 days, reopen the Strait of Hormuz without tolls and launch talks on Iran's nuclear programme. Officials have reported progress but key disputes remain over frozen Iranian assets, highly enriched uranium and precise sequencing of sanctions relief.
Ofgem has confirmed the energy price cap will increase by 13% from July, pushing typical annual bills to £1,862. The shift is driven by higher wholesale gas prices amid the Middle East conflict. About 40% of accounts are on fixed tariffs and are unaffected. Households are advised to consider fixed deals and smart-meter off-peak pricing.
The Guardian, Independent and Scotsman report that Castlelake has flagged a potential takeover of easyJet at no less than 403.23p per share, valuing the airline at about £3.06bn, while easyJet calls the approach highly opportunistic and notes ongoing regulatory and execution challenges.
The Bank of England’s policy stance is under renewed scrutiny as inflation remains above the 2% goal, with BoE officials signaling a potential shift toward earlier rate hikes in response to ongoing price pressures driven by the Middle East conflict. Bailey has argued against raising the target, while MPC members signal readiness to act.
The Beirut-based MEA faces a safety audit after pilot groups raise concerns about flying near airstrikes and about reporting safety incidents. Regulators say audits have confirmed regulatory compliance, while pilots allege pay-driven risks and retaliation against safety reporting.
The S&P Global UK services PMI has fallen to 49.3 in May, marking the first contraction since April 2025. New work is shrinking while export sales also weaken amid upheaval in the Middle East, with energy costs rising and investment plans cautious across the sector.
The UN World Food Programme has warned that the Middle East conflict and elevated oil prices have pushed millions more toward acute food insecurity: an extra 2.5m in Somalia, 2.3m in Afghanistan and 1.3m in Sri Lanka, and up to 45m globally if fuel stays at ~$100 a barrel through June.