UK economic growth slows to three-month low as Iran war drives inflation to its highest since June

From the Newshound archive · first published 23 September 2026 · last updated 24 September 2026.

Britain's private sector is caught in a "worrying combination" of weak growth and accelerating inflation, with September's S&P Global flash UK composite PMI dropping to 51.7 from 52.5 in August. The reading points to GDP growth of just 0.1% this quarter, according to chief business economist Chris Williamson. Sharp rises in energy and fuel costs tied to the Iran war pushed input price inflation to a three-month high. Activity softened across both services and manufacturing, with businesses citing geopolitical uncertainty and the approaching autumn Budget as drags on confidence.

S&P Global's Chris Williamson said high energy prices and 'geopolitical worries' are 'hamstringing' growth, confidence and hiring.

Services firms flagged 'subdued domestic economic conditions' as a key brake on activity, despite technology remaining a relative bright spot.

Input price inflation has now risen for two months in a row, raising fresh fears that the Bank of England faces a stagflation squeeze this autumn.