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Introduction: UK exports to Middle East drop 20 % since war began
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world econony.
UK trade to the Middle East has shrunk since the Iran war began eight weeks ago, new data shows.
The British Chambers of Commerce has reported that the number of certificates of origin issued by Chambers of Commerce for exports to the region fell by 20% year-on-year in March, down from 15,437 in March 2025 to 12,360 in March 2026
This decline indicates goods are either being delayed, rerouted or not shipped at all.
Companies classified as Arab League countries for certificates of origin include Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, Sudan, Syrian Arab Republic, Tunisia, United Arab Emirates and Yemen.
Steven Lynch, director of international trade at the British Chambers of Commerce, says UK firms are dealing with less reliable trade routes, rising costs and geopolitical risks, adding:
“Our documentation data shows a clear and immediate shock to UK trade flows linked directly to disruption across the Middle East. The fact that exports tied to Arab markets are falling far faster than elsewhere tells us this is a targeted, region‑specific impact, not a broad‑based downturn.
“Firms are reporting increased delays, rerouting via longer and more expensive pathways, enduring rising insurance premiums and facing stretched lead times. For SMEs in particular, this squeezes cashflow and confidence at a time when exporting is already challenging.
There’s no let-up in that challenge today, with the strait of Hormuz still badly disrupted and reports that the US is planning for a lengthy blockade of Iranian ports.
According to the Wall Street Journal, US President Donald Trump has instructed aides to prepare for an extended blockade of Iran.
UK companies are already pessimistic about the economic outlook, and expect activity to fall in the next three months according to the CBI’s latest Growth Indicator.
It has found that business volumes in the services and manufacturing sector are anticipated to fall over the quarter,
Alpesh Paleja, CBI deputy chief economist, explains::
“Business’ expectations for activity have weakened further, as companies continue to grapple with uneven trading conditions, strong cost pressures and renewed uncertainty.
“These challenges have been exacerbated by the conflict in the Middle East, which is increasingly hitting a broad swathe of UK businesses. Our surveys suggest that the additional pressure on costs and supply chains is feeding through to pricing intentions – but not nearly enough to offset the burden facing firms.
The agenda
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10am BST: Eurozone economic sentiment data
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2.45pm BST: Bank of Canada interest rate decision
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7pm BST: US Federal Reserve interest rate decision
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7.30pm BST: Federal Reserve press conference
Key events
Jennifer Rankin
Meta now has the chance to examine the commission’s investigation file and mount a defence against the charge that it has breached of EU law for failing to prevent children under 13 from using its Facebook and Instagram platforms.
If the finding against the Silicon Valley company is upheld, it could be fined up to 6% of its global annual turnover. Meta reported revenue of $201bn (£148bn) for 2025.
EC: Meta failing to prevent minors under 13 from using Instagram and Facebook
Newsflash: The European Commission has preliminarily found Instagram and Facebook in breach of Europe’s Digital Services Act (DSA) for failing to protect minors.
The EC says the two services, both owned by Meta, failed to “diligently identify, assess and mitigate the risks of minors under 13 years old accessing their services”.
It is proposing that Instagram and Facebook must change their risk assessment methodology, and strengthen their measures to prevent, detect and remove minors under the age of 13 from their service.
In a statement outlining its preliminary findings, the EC says there are no effective controls to prevent a minor below the age of 13 from entering a false birth date, and labels Meta’s tool for reporting minors under 13 on the platform as “difficult to use and not effective”
Henna Virkkunen, executive vice-president for Tech Sovereignty, Security and Democracy, says:
Meta’s own general conditions indicate their services are not intended for minors under 13. Yet, our preliminary findings show that Instagram and Facebook are doing very little to prevent children below this age from accessing their services. The DSA requires platforms to enforce their own rules: terms and conditions should not be mere written statements, but rather the basis for concrete action to protect users – including children.
Elsewhere in banking, Santander UK is taking an extra £179m provision to cover the cost of the motor finance scandal.
The charge has pulled Santander UK’s pre-tax profits in Q1 2026 down to £202m, from £358m a year earlier.
It also lifts the company’s total provision to £633m, which is ‘at the upper end of the previously assessed range.’
This comes after the Financial Conduct Authority issued its plans for a compensation scheme for customers who were overcharged for loans when buying a car, due to commission payments between lenders and car dealers between 2007 and 2024.
Santander UK has decided not to challenge the scheme, and has updated its scenarios and assumptions including operational and legal costs. However, the FCA’s proposals is now being challenged by Consumer Voice, who argue it does not compensate enough customers affected.
Lloyds profits jump despite £151m impairment charge from Middle East conflict
Lloyds Banking Group has shrugged off the economic uncertainty caused by the Iran war, by beating profit expectations for the first three months of the year.
Earnings at Lloyds jumped by a third in the first three months of 2026 to £2bn, up 33% compared with a year ago, and ahead of analyst forecasts of £1.8bn.
Lloyds chief executive Charlie Nunn said the banking group’s business model was “resilient in the context of the current economic uncertainties”, adding:
“We remain focused on supporting UK households and businesses as they look to strengthen their financial positions and achieve their goals.”
Lloyd also took a £151m impairment charge to reflect “the deterioration in economic outlook as a result of the Middle East conflict”. However, that was partly countered by a £50m improvement in “global tariff and political disruption risks”.
The uncertainty over the Middle East conflict means many holidaymakers are delaying their bookings until closer to departure time.
Jet2, the flights and package holiday firm, has reported this morning that since the conflict began, its customers’ “booking profile has become increasingly close to departure”, adding:
At present, Q1 (April, May, June) combined average load factor is in line with the prior year, with the current geopolitical uncertainty limiting visibility for the peak summer season and beyond.
As previously stated, we continue to invest in load factor and remain fully committed to pricing that is attractive and represents real value to our Customers.
Passenger bookings for summer 2026 are up 6.2% compared with the previous year, while Jet’s capacity is currently 7.7% higher than in summer 2025.
The company adds that it has ‘a high degree of cost certainty’ about its jet fuel costs, as it has hedged 87% of its summer requirements.
Heathrow has warned that it faces an ‘uncertain outlook’, after a positive start to the year.
London’s largest airport has reported a 3.7% rise in passengers in the first quarter of this year, up to 18.9m.
It says:
Following airspace closures in the Middle East, there was an increase in transfer passengers across Heathrow’s network. While Heathrow has temporarily absorbed demand from elsewhere, passenger numbers for the rest of the year are likely to be impacted whilst there is significant uncertainty in the Middle East.
Heathrow adds that it has “seen some impact from recent Middle East disruption”, but has not yet updated its outlook for 2026.
More UK firms fall into financial distress
The number of UK businesses in “critical financial distress” has jumped by more than a third amid fresh pressure linked to the conflict in the Middle East, according to new research.
Hotels and leisure firms are in particular distress after facing higher labour costs and taxes over the past year, latest research from Begbies Traynor Group (BTG) has shown.
BTG’s latest quarterly red flag report indicated that more firms edged closer to collapse in the first quarter of 2026 – the number of companies considered in “critical financial distress” rose by 36.9% to 62,193 for the quarter, compared with the same period a year earlier.
The number of businesses in “significant” financial distress meanwhile rose by 9.6% year on year to 634,867.
Ric Traynor, executive chairman of BTG, said:
“The shockwaves from a war in the Middle East will be felt across every corner of the global economy for some time to come.
After initial signs that the UK’s GDP was improving at the very start of the year, it now feels like after taking a step forward, the UK has taken a few steps backwards following one of the most severe energy shocks in living memory.”
Introduction: UK exports to Middle East drop 20 % since war began
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world econony.
UK trade to the Middle East has shrunk since the Iran war began eight weeks ago, new data shows.
The British Chambers of Commerce has reported that the number of certificates of origin issued by Chambers of Commerce for exports to the region fell by 20% year-on-year in March, down from 15,437 in March 2025 to 12,360 in March 2026
This decline indicates goods are either being delayed, rerouted or not shipped at all.
Companies classified as Arab League countries for certificates of origin include Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, Sudan, Syrian Arab Republic, Tunisia, United Arab Emirates and Yemen.
Steven Lynch, director of international trade at the British Chambers of Commerce, says UK firms are dealing with less reliable trade routes, rising costs and geopolitical risks, adding:
“Our documentation data shows a clear and immediate shock to UK trade flows linked directly to disruption across the Middle East. The fact that exports tied to Arab markets are falling far faster than elsewhere tells us this is a targeted, region‑specific impact, not a broad‑based downturn.
“Firms are reporting increased delays, rerouting via longer and more expensive pathways, enduring rising insurance premiums and facing stretched lead times. For SMEs in particular, this squeezes cashflow and confidence at a time when exporting is already challenging.
There’s no let-up in that challenge today, with the strait of Hormuz still badly disrupted and reports that the US is planning for a lengthy blockade of Iranian ports.
According to the Wall Street Journal, US President Donald Trump has instructed aides to prepare for an extended blockade of Iran.
UK companies are already pessimistic about the economic outlook, and expect activity to fall in the next three months according to the CBI’s latest Growth Indicator.
It has found that business volumes in the services and manufacturing sector are anticipated to fall over the quarter,
Alpesh Paleja, CBI deputy chief economist, explains::
“Business’ expectations for activity have weakened further, as companies continue to grapple with uneven trading conditions, strong cost pressures and renewed uncertainty.
“These challenges have been exacerbated by the conflict in the Middle East, which is increasingly hitting a broad swathe of UK businesses. Our surveys suggest that the additional pressure on costs and supply chains is feeding through to pricing intentions – but not nearly enough to offset the burden facing firms.
The agenda
-
10am BST: Eurozone economic sentiment data
-
2.45pm BST: Bank of Canada interest rate decision
-
7pm BST: US Federal Reserve interest rate decision
-
7.30pm BST: Federal Reserve press conference
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