- Nearly half of UK households struggling with everyday costs
- Economic confidence drops to lowest level since 2022
- Savings increasingly used just to cover basic expenses
The impact of the Iran war is beginning to show up where it matters most — inside UK homes. As oil, gas and raw material prices climb globally, fears are growing that the UK could be heading towards another cost of living squeeze.
According to the latest tracker from Which?, nearly half of households — around 14 million — are already struggling to afford everyday essentials. Many are now being forced to make difficult choices, from dipping into savings to selling possessions or borrowing money just to get by.
The pressure appears to be building alongside rising global costs, with the conflict in the Middle East pushing up prices of fuel, fertilisers and other key inputs that feed directly into household expenses.
Confidence drops as pressure builds
The mood across the country seems to be shifting quickly. Confidence in the UK economy fell sharply in the month to March 13, dropping 13 points to -56 — its lowest level since the end of 2022, according to the survey.
Which? said this reflects “a deep-seated pessimism across the country,” as quoted in a news report. Around 67 per cent of adults now expect the economy to worsen over the next year, while only 12 per cent believe it will improve.
Although sentiment has not fallen as far as it did during the pandemic or the 2022 cost of living crisis, the current drop suggests that financial strain is once again tightening its grip.
Savings no longer a safety net
For many households, savings are no longer a cushion — they are becoming a necessity. About 26 per cent of households are now regularly using savings to bridge the gap between income and essential spending, a noticeable shift from late 2025 when financial stress had started to ease.
Confidence in personal finances is also weakening, falling to its lowest level since April last year.
At the same time, inflation expectations are shifting. The Bank of England now expects inflation to rise to around 3.5 per cent and remain above its 2 per cent target through 2026, adding further strain on household budgets.
Sue Davies from Which? reportedly said the findings point to a worrying trend, reportedly stating that confidence has hit a low as households face rising prices alongside global uncertainty. She added that pressure on budgets is becoming “unsustainable” for many and urged people struggling with bills to seek support early.
For now, the broader picture remains uncertain. But with global tensions feeding into everyday costs, households across the UK appear to be bracing for a difficult period ahead.
