Commenting on the immediate impact on businesses of the US and Israeli combat operations in Iran and its military retaliation, William Bain, Head of Trade Policy at the BCC, said:
“There will be huge uncertainty for businesses as the situation in Iran and the wider Gulf region continues to rapidly develop.
“Research by our Insights Unit, carried out in February, shows that 80 per cent of exporters currently feel exposed to geopolitical risks.
“Beyond the human cost, a key focus for firms, both in the UK and globally, will be the ongoing security of flows of oil and liquefied natural gas from the region.
“If significant disruption occurs through the Strait of Hormuz, it will destabilise supply chains of oil and liquid natural gas to India, China and South Korea.
“This could quickly impact upon energy security, energy costs, wider inflation and economic growth in the Gulf and Indo-Pacific regions, as well as here.
“In 2024, we found that 50% of UK businesses had been affected by conflict in the Middle East so firms will be nervously watching these latest developments.
“Disruption to global aviation and shipping markets, including availability and cost hikes, are also serious concerns if the crisis becomes a medium- or long-term risk factor.”
Steve Lynch, Director of International Trade at the BCC, added:
“This is an extraordinarily precarious moment for global business. Over 20% of the world’s crude oil passes through the Strait of Hormuz, it is a strategic artery of the global economy, especially for energy in Asia.
“A full closure would be almost unthinkable, but even with this shorter halt we are seeing higher war-risk insurance premiums, rerouting costs and energy market volatility.
“That feeds directly into fuel bills, manufacturing costs, inflation and business confidence. For many UK firms, this will be an immediate commercial pressure.
“This currently looks like a high-intensity US intervention, of uncertain duration, but the risk of miscalculation, regional spillover or unintended escalation remains very real.
“China appears cautious and measured for now, yet major powers are clearly recalibrating in real time.”