Britain faces tighter fiscal and monetary choices as energy costs threaten prolonged inflation. Meanwhile, GSK is investing in Cambridge, Barclays has reported stronger profits, Unilever expects further pricing, and regulators are intervening in broadband and audit markets.
Goldman Sachs has warned that Brent crude could exceed $120 a barrel if Middle Eastern supply disruption continues. Sentoria examines the severe forecast, why the Strait of Hormuz matters and what prolonged high oil prices could mean for UK inflation, interest rates and business costs.
Political change, British Steel’s nationalisation, rising mortgage rates and renewed energy pressures shaped the UK business week. Sentoria reviews the main developments and considers the economic data, company results and policy decisions likely to influence the week ahead.
UK businesses face political change, rising mortgage rates and renewed market volatility as Andy Burnham prepares to become prime minister. China has condemned the nationalisation of British Steel, while Burberry reported improving sales despite disruption from the Middle East conflict.
UK government borrowing costs rose above 5% after renewed fighting between the United States and Iran pushed oil and gas prices higher. The increase in gilt yields reflects growing concern about inflation, further Bank of England interest-rate rises and pressure on the public finances, mortgages and business borrowing.
US inflation fell more sharply than expected in June as lower gasoline and energy prices reduced the annual rate from 4.2% to 3.5%. The figures have eased expectations of an immediate Federal Reserve interest-rate rise, although renewed conflict in the Gulf and rising oil prices could reverse part of the improvement.
Renewed Middle East tensions have pushed up oil prices, UK borrowing costs and expectations of further interest-rate rises. However, stronger consumer spending, improving retail results and proposals to unlock billions of pounds in new lending provide some positive news for British businesses.
UK fixed mortgage rates have recorded their fastest monthly fall since October 2024, with average two-year and five-year deals both declining to 5.52%. Greater product choice offers relief to borrowers, although rates remain above their levels at the beginning of 2026.
UK businesses are freezing permanent recruitment as weak demand, rising energy costs and uncertainty surrounding the Iran conflict push confidence and business output indicators to their lowest levels in years.
The UK economy is expected to have flatlined or contracted again in May as higher energy costs and weak service-sector activity weigh on growth. Stronger retail sales and positive three-month figures, however, suggest a fragile slowdown rather than a clear economic downturn.
