Britain's factories are facing the sharpest rise in production costs since October 1992, driven by surging oil and gas prices linked to conflict in the Middle East. S&P Global reported that input prices for manufacturers have climbed at the fastest rate in more than three decades, raising fears of a fresh economic downturn.

Economic growth slowed to a six month low in March, while retail sales fell at the steepest pace since April 2020. Oil prices climbed above 105 dollars a barrel, government borrowing costs reached their highest level since 2008, and major lenders increased mortgage rates. Analysts warned that if energy prices remain elevated and borrowing costs continue to rise, Britain could face a pronounced recession.

Despite mounting uncertainty, a senior Bank of England official said interest rates may still need to increase to contain inflation. S&P Global also pointed to slowing activity across Europe, warning of a period of stagnation marked by weak growth and energy driven price pressures.