British economy

Published on
22/04/2026 – 10:40 GMT+2

The cost of living in the UK accelerated throughout March, propelled by a significant increase in petrol and diesel prices following the outbreak of the Iran war.

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According to the Office for National Statistics, the annual consumer price inflation rate moved to 3.3% from 3% the previous month, a shift that matched the forecasts.

This inflationary pressure is largely attributed to an 8.7% monthly jump in motor fuel costs, which represents the sharpest rise seen since the summer of 2022, following Russia’s full-scale invasion of Ukraine.

Beyond the petrol stations, the fallout from higher energy prices has trickled down into airfares and food supplies, complicating the economic landscape for the government and the Bank of England.

UK Treasury chief Rachel Reeves noted that while the conflict is not a domestic one, it is directly pushing up bills for families and businesses across Britain.

Lindsay James, an investment strategist at Quilter, observed that “this morning’s inflation data showed CPI creeping back up to 3.3%, confirming that price pressures are re-accelerating rather than fading away since the outbreak of the war in Iran.”

While international markets have shown some signs of recovery in equity prices, the physical market for oil delivery into Europe remains under immense strain.

Experts suggest that a swift reopening of the Strait of Hormuz is the only viable path to unwinding the current inflationary trend, yet the situation remains volatile and unpredictable.

The Bank of England’s policy dilemma

The timing of this inflation surge is particularly problematic because it coincides with a period of cooling in the domestic economy.

Recent data from the labour market indicates that payrolled employment is falling and economic inactivity is on the rise, while wage growth has started to ease.

For the average British worker, the combination of rising essential costs and stagnating earnings growth creates a challenging environment for real purchasing power.

As for the Bank of England, this sudden spike in prices has disrupted the projected path of beginning to lower borrowing costs this spring.

Prior to the escalation of the Iran war, there was a growing consensus that the central bank would reduce its main interest rate from 3.75% as inflation appeared to be heading back toward the official 2% target.

However, with inflation now expected to potentially hit 4% in the coming months, the Monetary Policy Committee faces a much more difficult decision during its meeting next week.

There is a growing debate among economists regarding whether traditional interest rate hikes are the correct tool to address this specific crisis.

According to James “a rise in rates risks misdiagnosing the problem. This inflationary pulse is being driven by supply disruption, not excess demand. Higher interest rates will do nothing to increase the flow of oil or other goods from the Middle East.”

This sentiment suggests that the Bank of England may choose to maintain its current stance, keeping rates on hold while monitoring whether these price increases begin to manifest in higher wage demands across the broader economy.

He was asked if now is a good time to open an ISA or not

Martin Lewis has offered some advice on how you could organise your savings. He explained the practical tip amid the current uncertainty surrounding the economic impact of the Iran conflict.

The major war has already triggered a surge in oil prices, with fears of long-term consequences for food production and global economic growth.

Mr Lewis was questioned on his BBC podcast about whether now is an opportune moment to open a stocks and shares ISA, given that markets are struggling. When share prices fall, it can present a prime opportunity to invest, as your funds could increase in value when the market bounces back. But if prices decline further, the worth of your holdings could also drop. In response, Mr Lewis outlined the general principle to bear in mind.

He said: “If you’re talking about investing for a long term money that you don’t need for five years and you’re going to do that in a nice spread of investments, like a global tracker fund or an S&P tracker or FTSE tracker, then you just have to accept that you will never know when the perfect time to put money in is.”

£1,000 savings tactic

Nevertheless, he did reveal one strategy you could use to reduce the risk posed by market volatility. Mr Lewis said: “Let’s just imagine you’re putting £10,000 in a stocks and shares ISA, and you’re putting it away for a long time.

“You could put £10,000 in now but you could arrange with the provider that it sits in its cash part. You can hold it in cash, within a stocks and shares ISA, for the moment.

“You could say I’ve got £10,000, over the next 10 months, I’d like you to buy £1,000 a month of that tracker fund that I’m putting my investment into. It’s called pound-cost averaging.

“Because you’re drip feeding the money in, that helps smooth out the short-term volatility of buying at the right moment. So if you’re worried about that volatility, you might want to adopt that tactic.”

Mr Lewis continued in saying that in reality nobody can predict the optimal time to invest. He said: “They are unknowable in the short term, but in a broad spread of investment over the long term, on the balance of probabilities, investing will outperform saving.

“So don’t let the volatility put you off, but you might want to spread the time that you’re putting the money in.”

Major changes to ISA allowances

Savers may also want to note that major changes to ISA allowances are on the horizon. Currently, you can deposit up to £20,000 each tax year, which can be divided as you wish between cash ISAs and stocks and shares ISAs.

From April 2027, you will only be permitted to save up to £12,000 as you choose. The remaining £8,000 will only be available for deposits into investment-based accounts.

Savers aged 65 and over will be exempt from the new regulations, retaining the existing £20,000 allowance. ISAs are entirely tax-free, with no tax liability on any interest earnings or investment gains within these accounts.

Travel expert Mark Wolters warns holidaymakers against saying certain phrases at passport control that could land them in hot water with immigration officers

Holidaymakers are being warned against uttering a ‘fun’ six-word phrase whilst going through passport control. A travel expert cautions this is because you could land yourself in serious trouble with immigration officials.

Mark Wolters, from Wolter’s World, has visited more than 80 countries throughout his travels. He now shares his expert advice for people who find themselves venturing across the globe.

In a recent video, Mark highlighted that travellers must avoid making jokes when passing through international borders.

He explained: “‘I’m going to stay here forever, I love your country’. That sounds like a fun thing to say to the passport control officer when you come into a country, but I want to tell you, that is something you don’t ever want to say when you come across a border.”

He emphasised that you shouldn’t “joke around” when at passport control. He encourages travellers to respond to them “politely”, reports the Express. He continued: “Don’t add in the dad jokes.

“I know for me, my go-to when they’re like, ‘What are you going to do here?’ I’m like, I’m going to help the British economy by spending lots of money.

“Yes, it’s a good dad joke but it’s best to be like, ‘I’m here for tourism with my family’. That’s one of those things, you have to realise those passport and those border officers aren’t allowed to have humour, they’re there doing their job.”

Mark explains that border force officers are stationed there to ensure the “wrong people aren’t coming in”, which means it’s unwise to mess about. He suggests you can make your “life easier” by staying composed and courteous.

Mark cautions there are certain phrases you should “never” utter at security. He continued: “You don’t ever say the word bomb, you don’t say human trafficking, you do not joke about drugs, you do not joke about overstaying, like, ‘I want to stay here forever’.

“You do not say any of those things because those are the trigger words where they go, ‘Oh wait, we need to do something’. Even if they know you’re joking, they don’t have a choice.”

The specialist also recommends people keep their passport out until they’ve cleared security. He mentions he’s frequently witnessed travellers packing away their documents and wandering off, only to be summoned back by passport control.

He stated: “If you’re putting your documents away before they feel it’s right, they could think, ‘Oh this person’s nervous, they’re trying to get away quicker’. That can lead to other questions, so just wait until they dismiss you.”

Holidaymakers are also advised to ensure they’ve got their accommodation sorted. He notes that arriving without lodgings arranged can frequently trigger “more questions” and raise concerns about trafficking.

“I sent my itinerary to myself, so we can say, ‘Oh we’re staying at the Marriott Amsterdam on this street here’,” Mark elaborates. “That makes it a lot easier because that’s one of those typical questions they might ask, so it’s good not to be vague.”