The War Is Already in Your Tank, Your Mortgage, and Your Energy Bill

1. Four Weeks

On 28 February 2026, the US and Israel launched a joint offensive against Iran. Iran closed the Strait of Hormuz. Twenty per cent of the world’s oil and a significant share of its liquefied natural gas stopped moving.

Four weeks later, you are paying for it.

Brent crude has gone from $77 to $108 a barrel — a 40% increase in under a month. UK petrol has passed 150p a litre, up 15% since the war began. Diesel is at 177p. This is not a forecast. This is your Friday morning.

2. The UK Is the Worst-Hit Major Economy

The OECD downgraded UK growth from 1.2% to 0.7% — the largest cut of any G7 nation. For comparison: Germany went from 1.0% to 0.8%. France from 1.0% to 0.8%. The US forecast actually rose.

UK inflation is now expected to hit 4% this year, up from the OECD’s previous estimate of 2.5%. The BBC reports that some economists now expect UK inflation to breach 5% if the conflict persists through summer.

The OBR’s Spring Forecast, published on 3 March, projected growth of 1.1% and assumed CPI would fall to 2.3%. Those forecasts were finalised before the war started. They are already fiction.

3. Energy Bills: The July Cliff

Millions of households are currently shielded by the Ofgem price cap. The April cap brings a small reduction — average bills fall to around £1,568. That protection expires in July.

Cornwall Insight forecasts the July–September price cap at £1,827 per year for a typical dual-fuel household. EDF’s tracker estimates it could reach £1,928 by January 2027.

Wholesale gas prices have nearly doubled since the conflict began. Qatar has declared force majeure on all exports after Iranian airstrikes on the Ras Laffan industrial complex. The IEA calls this the “greatest global energy security challenge in history.”

4. Your Mortgage Just Got More Expensive

The average five-year fixed mortgage rate has risen from 4.94% on 4 March to 5.52% — the highest since July 2024. Two-year fixes have climbed from 4.82% to above 5.3%.

Reuters reports that 21% of UK mortgage products have been pulled from the market since the war began. The Bank of England was expected to cut rates further this year. Markets are now pricing in the possibility of a rate rise instead.

5. What It Adds Up To

A 0.58 percentage point rise in mortgage rates on a £200,000 loan adds roughly £70 a month. Combined with the energy bill increase, that is over £1,000 a year in additional costs for a single household — before fuel, food, and everything else that moves by road.

6. The Government’s Numbers Are Already Wrong

The OBR’s March 2026 Economic and Fiscal Outlook was published on 3 March — three days after the war began, but based on data from January. It assumes CPI falls to 2.3% this year. The OECD now says 4%. The fiscal headroom Rachel Reeves announced — £24 billion — was built on assumptions that no longer hold.

The Iran war did not create the UK’s economic fragility. It exposed it. An economy with no fiscal headroom, frozen tax thresholds, a record public sector, and near-zero productivity growth has no buffer when an external shock hits.