Eight out of ten UK businesses are experiencing negative impacts from the Middle East conflict, with a fifth pausing investment due to geopolitical uncertainty, according to a new survey. The findings highlight the widespread economic fallout from the Iran war, which has disrupted global markets and supply chains.
Key Challenges Facing Businesses
The survey reveals that 64 per cent of firms cite rising energy and fuel costs as a major challenge, while 34 per cent report higher shipping expenses and 33 per cent face supply chain disruptions. As a result, 37 per cent of companies expect to pass these increased costs onto consumers, potentially fuelling inflation.
Impact on Small vs. Large Firms
Small businesses are adopting a cautious approach, reducing borrowing and increasing savings to weather the uncertainty. In contrast, larger firms are prioritising long-term investment, particularly in technology. Nearly seven in ten firms plan to boost cybersecurity investment, reflecting heightened concerns over digital threats amid the conflict.
Rise of Agentic AI
Over 60 per cent of businesses are now utilising agentic AI, with more than half reporting improved productivity from AI and automation. This shift underscores the growing reliance on advanced technology to offset operational challenges.
Barclays' chief executive has called for the creation of a Cabinet-level AI role within the UK government, arguing that stronger strategic intent is needed to capitalise on economic opportunities and maintain competitiveness.
The survey paints a stark picture of the business landscape, with uncertainty becoming the norm. As the conflict continues, firms are bracing for further disruptions while seeking ways to adapt and innovate.
