More than a third of UK businesses with ten or more employees are now worried about international conflict disrupting their supply chains — the highest level of concern recorded since September 2024 — as the ongoing war in Iran continues to drive up energy costs, fuel prices, and shipping disruption across the economy.
New data from the Office for National Statistics' Business Insights and Conditions Survey, covering the period from 16 to 29 March 2026, found that 37% of larger businesses cited international conflict as a supply chain concern, a 27 percentage point increase from December 2025. A further 21% flagged shipping disruption, up 14 percentage points over the same period.
Of those businesses concerned about supply chains, 56% expect material sourcing costs to increase and 50% anticipate higher transportation costs — pressures that are already feeding through into consumer prices and threatening the fragile economic recovery.
Energy costs remain the dominant concern, with 55% of all businesses and 74% of those with ten or more employees expressing worry about energy prices in March. Forecasts project an 18% rise in household energy bills to £1,929 annually from July, primarily driven by higher wholesale prices linked to the Iran conflict.
The survey also found that 95% of businesses were actively trading in late March, with 85% fully trading and 10% partially trading. However, job cuts are emerging across hospitality, retail, and manufacturing, with the hospitality sector particularly affected by the combination of minimum wage increases, higher business rates, and soaring energy costs.
Despite the pressures, AI adoption continues to accelerate, with 26% of businesses reporting the use of at least one AI technology in March — an 8 percentage point increase from March 2025. For larger businesses with 250 or more employees, the figure rose to 45%.
Global markets provided some relief on Friday after President Trump suggested the Iran conflict could end within two to three weeks, triggering a relief rally that saw the FTSE 100 gain 1.7%, Brent crude fall below $100 per barrel for the first time since the conflict escalated, and the dollar weaken against major currencies.
