But RLB says firms better prepared to deal with impact on trade caused by fighting
RLB has said the war in the Middle East is starting to weigh more than on firms’ minds the longer it goes on.
In an update, the consultant said: “Before the Middle East conflict, inflation felt like it was under control and interest rates were on a downward trajectory.
“However, geopolitical developments have introduced new uncertainty into the economic outlook, with recent speculation about fuel increases and supply chain and procurement challenges due to trade channels closing, and the resulting impact on inflation and interest rates.”
But RLB’s head of industry and service insight Paul Beeston said firms were better prepared for shocks than four years ago when Russia invade Ukraine.
He said: “Much will depend on how quickly the current situation is resolved but it is important to recognise that many underlying conditions are more positive today than during previous shocks. While risks have risen, it is important not to allow rhetoric to overtake reality.”
And he added: “If disruption is short‑lived, any inflationary pressure from higher input costs is likely to be moderated by slowing pipelines.
“However, a more prolonged period of disruption would shift the balance of risk between concurrent input cost pressures and pipeline concerns which will pull tender prices in different directions in different sectors. In that environment, informed decision making, rather than over reaction, will be critical.”
In an update this morning, Glenigan’s economics director Allan Wilen said firms were getting more nervous as the war dragged on.
“[Any] shockwaves will be felt as the prospect of lower borrowing costs fade and as operational costs spiral from higher energy costs and reduced access to key structural materials as the strait of Hormuz remains at the centre of the conflict zone.
“The supply chain across the industry will be watching the situation nervously, with the best outcome being a swift resolution of the conflict and the unblocking of trade routes.”
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