The US-Israel war against Iran has severely impacted the UK across economic, diplomatic, and defence sectors. The conflict has caused a spike in energy prices, slowed GDP growth, and dragged down consumer confidence. Intermittent de-escalation deals negotiated between the US and Iran offer some relief, though economic recovery may take time. According to the Office for National Statistics, the UK’s gross domestic product fell by 0.1% in April 2026, following growth of 0.3% in March. Surging energy prices triggered by the war have reignited inflationary pressures and threaten to derail growth. In response, Finance Minister Rachel Reeves stated,
“Before the conflict in the Middle East, growth was higher than expected and inflation was falling. This is not a war we wanted or joined, but one that will have an impact at home.”
The International Monetary Fund (IMF) has warned that the UK is particularly vulnerable to the fallout from the Iran conflict due to its heavy reliance on gas.
Prime Minister Starmer initially refused to let British bases be used for US-led strikes on Iran, straining relations with Trump; however, he later permitted limited American use for defensive purposes. Consequently, the UK was drawn into regional skirmishes, deploying RAF Typhoons and relocating naval assets to the Eastern Mediterranean to protect shipping and military bases.
Professor Christopher Phillips has analysed Starmer’s handling of the Cyprus situation when it was targeted by Iranian drones. The slow deployment of the Royal Navy destroyer HMS Dragon to help protect Cyprus has raised further concerns about Britain’s military capability. Similarly, while UK forces have helped defend allies from Iranian attacks, some Gulf officials have expressed frustration at their limited nature. The UK’s decision to remove its only mine-hunting ship from Bahrain for maintenance in the weeks before the war—despite the US’s obvious military build-up—fed into these criticisms. Though there is a proposal by Trump to end the US-Iran war—which many view as largely unwarranted—one cannot predict the maverick nature of President Trump, as he keeps changing his goalposts.
Starmer may face two significant problems should the war continue indefinitely. The first is economic recovery. The Prime Minister and his Chancellor, Rachel Reeves, have virtually bet their political fortunes on achieving sufficient growth to repair public finances and reduce the cost of living for ordinary people. The war has already shattered their hopes for 2026. The Bank of England did not cut interest rates as expected, citing the obvious effects of the three-month-old conflict. Energy bills, mortgage costs, petrol prices, and food bills are all rising. Starmer fears that things will worsen as the war continues—a situation beyond his control that deals a significant blow to his electoral prospects.
The second problem is his relationship with Trump. One of Starmer’s few achievements in office so far has been his ability to maintain strong ties with the President. However, cracks were appearing before the war, as the UK stood by Denmark over the White House’s public threats to seize Greenland. Nonetheless, the conflict has worsened US-UK relations. Starmer has tried his best to tread carefully on the tightrope, seeking to fulfil Britain’s alliance obligations as much as possible without being drawn into the conflict. This has meant gradual concessions: initially denying the US access to British bases, but later permitting their use to defend allies against Iran’s retaliations.
The UK belatedly allowed Washington to use the joint airbase on Diego Garcia for “limited and defensive” Iran operations, having initially refused. However, the UK has been slow to commit to protecting shipping through the Strait of Hormuz, as Trump has publicly demanded, creating a significant diplomatic row. Besides these issues, Starmer must support key Gulf allies such as Bahrain, Oman, and the UAE, while ensuring the safety of UK citizens living there. The UK has evacuated over 100,000 British citizens from those countries within days.
However, UK armed forces have not projected reassuring power in the region as they once could. Small numbers of RAF Typhoon and F-35 aircraft are intercepting Iranian attacks. The UK is reportedly considering deploying assets to help secure the Strait of Hormuz once the war is de-escalated. The absence of minesweeping assets at the outbreak of war highlighted significant reductions in Royal Navy capability, according to some Gulf observers.
Professor Phillips opines that the war could affect the UK in ways currently unforeseen. He speculates that regime collapse or civil war in Iran could lead to a migration crisis or increased international terrorism, as occurred during the Syria conflict a decade ago. He warns that one challenge for Britain is that Iran may target British assets, as it has already done in Cyprus and Diego Garcia. The war raises bigger and longer-term strategic questions for British foreign policy. When the US begins a war that the Prime Minister judges not to be in the national interest, is it better to remain distant and try to manage the fallout, or stay close in the hope of shaping decisions?
It is reported that former Prime Minister Tony Blair argued in favour of backing the US from the very beginning and allowing US bases to be used for attacks on Iran. However, Starmer seems to have proven right in charting a course that served the UK’s interests. Britain’s future in the Gulf and West Asia looks uncertain. Will the economic shockwaves of the war mean Britain tries to insulate itself better from future shocks by decreasing its dependence on fossil fuels? Or should it reverse its recent distance from the region and play a fuller role in securing prices and supply?
The UK’s reluctance to get involved in the US-Israel war on Iran may, in hindsight, prove to be an appropriate decision by the Starmer government. However, it also indicates the UK’s declining ability to influence the US and win the confidence of its allies in West Asia. Despite the Iran-US deal, the shaky ground continues to wreak havoc on the global economy and international peace.
