There are three major ways that life for Brits could be impacted by the ongoing conflict between Israel and Iran, experts have warned
The ongoing conflict between Israel and Iran could impact life for Brits in a few major ways, experts have warned – and one of them has already come into play.
Israel launched a wide-scale attack against Iran and its nuclear programme on 13 June – and world leaders have called for de-escalation, including Keir Starmer.
Iran has since launched missiles at Israel in response, most of which were intercepted by the country’s ’iron dome’, but some managed to penetrate.
Whilst Prime Minister Kier Starmer has called for “calm” and the need for diplomacy he has not ruled out getting involved and defending Israel and has sent RAF jets to the Middle East.
President Trump has warned Iran not to target the US or its assets in the region, saying his country would strike back “at levels never seen before” if they did so. Whilst the US is not directly involved yet, Trump has said “it’s possible” they will get involved in the conflict – but he is reported to have discouraged Israel from killing Iran’s Supreme Leader Ayatollah Ali Khamenei, reportedly telling Israeli Prime Minister Benjamin Netanyahu it is “not a good idea”.
If the conflict continues to escalate – and the US were to become directly embroiled in it – there is a possibility that the UK could be dragged in – though 50 percent of Brits have said in recent polling that they don’t support getting involved.
However, one major change has already come into play, with the Foreign and Commonwealth Office issuing a warning to Brits against all travel to Israel, after Iran’s attack saw a state of emergency declared in the country and the closing of its airspace.
Brits were already advised against any travel to Iran because they are at “significant risk of arrest, questioning, or detention” simply for having a British passport.
Experts have warned that the most likely way in which the conflict will impact day-to-day life in the UK is economically. Speaking exclusively to The Mirror, Ahmet Kaya, Principal Economist at the National Institute of Economic and Social Research (NIESR), explained that with the conflict coming during a time of global uncertainty, there was a possibility it could impact inflation rates in the UK.
“Uncertainties are already at their peak levels mainly due to US trade and tariff policies,” the expert explained. “The conflict, as it stands, can affect the UK economy mainly due to potential additional shock to inflation.”
He added that there are two ways how this could happen, noting that in earlier research he had found that if oil prices increase by $10 then it “could increase the UK inflation by about 0.5 percentage points.
“Brent oil prices rose by about $4 per barrel since Israel’s strike, which means we may see UK inflation to go up by about 0.2 percentage points.”
The expert explained that a 0.2 percent rise “is not so worrying, unless a new shock occurs related to events.”
The second way in which the UK economy could be impacted – and Brits potentially see some prices rise even further – is due to the general uncertainty that the conflict between Israel and Iran brings, the economist explained.
“As I mentioned, the war seems to keep uncertainties elevated for a longer period. This means that businesses and individuals may be more reluctant to invest [or] spend.
“While the immediate effect of this could be mild, we have already seen that flights and cargo vessels have rerouted from the Middle East. This means longer travel hours and higher insurance [and] freight costs, which may hit inflation in return.”
The cost of living is already an issue that sees many people in the UK struggling to manage their budgets, with energy bills and high food costs just a couple of the ways in which Brits have seen their bank balances impacted since 2021 – with many families suffering a decline in their living standards since.
“We already saw a rise in inflation in April with 3.5 percent due to [the] increase in Ofgem price cap,” the expert explained. “The conflict may potentially keep this figure elevated. If the monetary policy committee of the [Bank of England] BoE considers these potential pressures to remain permanent, they may also be reluctant to cut interest rates soon.”
Other financial experts have echoed these sentiments, with one saying we are seeing “predictable knee-jerk reactions” to the uncertainty created by the conflict in global markets already. Many have noted that energy and petrol prices may rise in the UK – whilst investors turn to so-called ‘safe havens’ like gold that are seen as a risk-averse choice.
“Global oil prices are up, hitting their highest price in almost five months after Israel struck Iran, dramatically escalating tensions in the Middle East and raising worries about disrupted oil supplies,” said Tony Redondo, Founder at Cosmos Currency Exchange, noting that its “the end of the cheapest petrol prices in the UK for four years.
“Gold has been up to a one-month high as the markets swing to risk aversion mode. Stock markets will sell off. These are all predictable knee-jerk reactions.”
Expert Prem Raja – Head of Trading Floor at Currencies 4 You – has said: “Markets are reacting with a classic risk-off tone. Investors are seeking safe havens, and oil prices is rising with supply disruptions feared, potentially ending the UK’s run of low petrol prices.
“In the short term, expect volatility across equities, FX, and commodities. Safe haven assets such as gold, the US Dollar, and the Swiss franc typically benefit in these conditions, while sectors like aviation and consumer goods may face pressure.
“However, historically, markets tend to absorb geopolitical shocks; unless there’s sustained escalation, equities are likely to shrug this off in the medium to long term.”