Middle East Conflict Impacts Half Of UK Firms

14th November 2024

The findings, from the BCC’s Insights Unit, also show a rise in impact since February 2024, when firms were asked specifically about Red Sea disruption, and two-fifths (37%) were affected. 

• Half (50%) of UK businesses say they have been impacted by the conflict in the Middle East. 
• This is almost double the proportion (26%) who said they were affected in late October 2023, 
• ?The main impacts cited by businesses are increased costs, shipping disruption and delays, and uncertainty on oil prices.? 
• Some firms report cancelling work in the Middle East because of the conflict.

The findings, from the BCC’s Insights Unit, also show a rise in impact since February 2024, when firms were asked specifically about Red Sea disruption, and two-fifths (37%) were affected. 

Shipping container rates have fluctuated significantly since the current Middle East conflict began in October 2023. The cost of shipping a 40ft container from Shanghai to Rotterdam has risen from just over $1,000 then, to just under $4,000 now, having peaked at over $8,000 in July. 

The View From Business 

“The conflict in the Middle East (especially the effective closure of the Suez Canal) has massively increased shipping costs to and from Asia” 

Medium sized manufacturer in Surrey  

“As a reseller of low value items, the huge increases in shipping costs have had substantial impact on prices” 

Small retailer in Dorset  

“Ships now route via South Africa, and this has an impact on port calls and transit times” 

Small logistics firm in Suffolk  

“Transit times extended by at least 14 days” 

Small retailer in Kent 

“Increased shipping times to Middle East have a knock-on effect on our production programmes. It is reducing our time available to complete projects” 

Micro manufacturer in Cambridgeshire 

Commenting on the findings, William Bain, Head of Trade Policy at the BCC, said: 

"Alongside the grim human impact of the ongoing conflict in the Middle East, the situation continues to have economic reverberations around the world.

“The effect on businesses here in the UK has continued to ratchet up the longer the fighting has continued. 

“If the current situation persists, then it becomes more likely that the cost pressures will build further.? 

“Certain sectors of the economy are obviously more exposed to this than others. But with the on-going war in Ukraine, wider geopolitical uncertainty, and the prospect of tariffs looming, the UK needs to think carefully about its trade strategy.? 

“We need to seek out new deals with like-minded nations on critical raw materials, components and minerals to ensure their supply. And we must lean more heavily into the digital trade revolution to reduce costs and make exporting and importing simpler. 

“The use of economic diplomacy can also not be underestimated. The UK has a powerful brand and distinctive reputation around the world which we must harness to greater positive effect. 

“Overseas trade is vital to growing our economy. We must do everything we can to see businesses through these tough times, and then set a laser-sharp focus on expanding exports for the future.”