Fuel shock stalls recovery before it has started

The Middle East conflict has rendered previous economic forecasts obsolete, with soaring oil prices scorching the patchy cluster of green shoots that had been emerging in late 2025 and early 2026. The tone of our January forecasts indicated that the recovery was not firmly embedded anyway, but the subsequent lift in fuel costs has ensured that economic growth will definitely not meet any previously upbeat expectations. Businesses and consumers will struggle with immediately higher costs that are knocking confidence and will limit spending growth.