gg2
UK pay growth slows amid Iran war squeeze
Archived — this story has rotated out of today’s deck. It is kept here in full.
The gist
UK pay growth slowed in June as Iran war squeezes living costs.
Rising energy bills and inflation threaten households, with new PM under pressure.
Background
The UK is experiencing a renewed cost of living squeeze as the economic fallout from the Iran war drives up energy prices and inflation. Official figures show wage growth slowed in June, while GDP growth also decelerated in the second quarter. Economists forecast that soaring energy bills will push inflation to 2.9% in July, up from 2.6% in June, adding pressure on households and the new Prime Minister.
How it unfolded
- Aug 14, 2026Chancellor John Healey warned of grim economic outlook as UK GDP growth slowed to 0.4% in Q2, down from 0.6% in Q1.
- Aug 16, 2026Reports suggest UK inflation is expected to rise to 2.9% in July due to soaring energy bills, intensifying the cost of living crisis.
- Aug 18, 2026ONS data shows UK pay growth slowed in June, while oil prices jumped above $90 a barrel after the US-Iran ceasefire expired.
Who’s saying what
- Economists
- Economists warn the impact of the Iran war on energy prices will weigh more heavily in the second half of the year.
- Government
- Chancellor John Healey faces grim warnings about the economic impact, with growth slowing and inflation rising.