The Confederation of British Industry says unusually strong first-quarter economic performance is unlikely to continue as geopolitical tensions begin affecting the economy.
The UK’s economy may have posted surprisingly strong growth in the first quarter of 2026, but business leaders warn this pace won’t last as the Iran conflict starts to bite. The Confederation of British Industry said the figures show “unusually strong” performance that “is unlikely to be sustained at this pace, especially as the effects of the Iran conflict begin to be felt.”
The warning comes ahead of official GDP data from the Office for National Statistics, which has yet to release Q1 2026 figures. The latest available statistics show the economy grew by just 0.1% in the final quarter of 2025 – a modest performance that makes the CBI’s description of Q1 as “unusually strong” all the more striking.
The Iran Factor
Oil prices tell part of the story. Brent crude has averaged $82 per barrel in May 2026, up 8% year-to-date as Middle East tensions escalate. The Department for Energy Security and Net Zero data shows this volatility is already feeding through to petrol forecourts, with Kent prices hitting £1.45 per litre.
Business investment remains weak despite the apparent Q1 boost. The Bank of England notes that while inflation has stabilised at 2.1% – close to the target – companies are holding back on major spending decisions.
Political Divide
The government welcomes any strong growth indicators as evidence that post-recession policies are working, according to HM Treasury. But opposition voices argue the strength comes from one-off factors and warn against complacency given trade barriers and energy risks highlighted by Shadow Chancellor statements.
The CBI’s measured tone reflects broader business uncertainty. Their analysis suggests the temporary growth spurt masks deeper vulnerabilities from geopolitical tensions and weak consumer spending patterns.
Source: @CBItweets
Key Takeaways
- UK Q1 2026 growth appears unusually strong but CBI warns pace won’t continue
- Iran conflict effects expected to dampen economic performance in coming quarters
- Oil price rises already pushing up costs for businesses and motorists
What This Means for Kent Residents
Kent households should brace for higher petrol costs as Middle East tensions push up oil prices, with forecourt prices already at £1.45 per litre across the county. Local businesses, especially those using Dover and Thamesport for imports, face shipping cost increases of 5-10% according to South East Local Enterprise Partnership assessments, which could translate to higher prices for goods. Manufacturing firms in Medway and Thanet should plan for rising input costs, while any economic slowdown later in 2026 could affect job prospects despite the current strong growth figures.