The ongoing conflict in Iran is already weighing on global economic confidence, according to HSBC, as business leaders warn of rising costs, disrupted trade, and growing uncertainty across key markets.
Georges Elhedery said the situation in the Middle East is beginning to affect confidence worldwide, with concerns extending beyond the region.
He pointed to rising prices across oil, goods, fertilisers and metals as key risks, warning that prolonged instability could have widespread economic consequences.
Despite some volatility, oil prices remain elevated, with Brent crude hovering close to $100 a barrel, reflecting ongoing supply concerns linked to the conflict.
Companies across multiple sectors are already feeling the strain. Recruitment firm PageGroup said the conflict is driving a more uncertain outlook, particularly in the UK, Europe, Asia and the Middle East, with weaker salary growth compared with previous years.
Meanwhile, manufacturers reliant on petroleum-based materials are facing sharp cost increases. Tom Beahon, co-founder of sportswear brand Castore, said production costs have risen by up to 15%, warning that prolonged disruption could lead to higher prices for consumers.
He also highlighted supply chain challenges, including reduced flight capacity and shipping delays linked to disruption in the Strait of Hormuz.
The conflict has pushed up energy prices globally, increasing pressure on businesses and households alike. Airline executives have warned that jet fuel costs have surged to more than double pre-war levels, adding further strain on the aviation sector.
Brendan Nelson stressed that restoring stability in the Middle East is essential to ease pressure on global energy markets and prevent further inflation.
He warned that prolonged disruption could drive up costs while slowing economic growth, creating a difficult environment for policymakers.
Although HSBC has so far seen limited capital outflows from the Middle East, some wealthy investors are reportedly exploring relocation options in Asia, including Singapore and Hong Kong.
Financial markets have also reflected the uncertainty. London’s FTSE 100 showed modest gains, while some companies flagged concerns about the broader geopolitical and economic environment.
As the crisis continues, policymakers are under pressure to respond. Rachel Reeves has called for coordinated international action to manage the economic fallout and stabilise markets.
With global supply chains disrupted and energy costs rising, economists warn that the longer the conflict continues, the greater the risk to growth, inflation and business confidence worldwide.
