The ongoing conflict in Iran is expected to push an additional 200,000 households in the United Kingdom into poverty, according to economists at the National Institute of Economic and Social Research (Niesr). The escalation in energy prices, alongside rising costs for petrol and food, is anticipated to place significant financial strain on UK families, particularly those with lower incomes.

Niesr projects that the economic fallout from the war will contribute to a slowdown across the UK economy, curbing wage growth and increasing unemployment levels. These factors combined are likely to reduce household incomes and exacerbate challenges to living standards, with the most severe effects expected among the poorest segments of the population.

Economist Adrian Pabst highlighted the disproportionate impact on lower-income households, which generally allocate a larger portion of their budgets to essential items such as energy and food. "The new energy price shock caused by the war in the Middle East highlights old vulnerabilities," Pabst stated. He warned that income reductions due to diminished economic activity and higher unemployment, coupled with inflation-driven cost increases, could push at least 200,000 more households into absolute poverty without targeted government intervention.

Currently, approximately five million UK households live on incomes below £1,500 per month after housing costs, a threshold defined by Niesr as less than 60% of the median income for 2023-24. The forecasted rise in poverty would further compound this figure, with about 100,000 of the newly affected households having monthly spending power estimated between £500 and £1,000.

Inflation in the UK accelerated to 3.3% in March, primarily attributed to rising fuel prices, and economists expect this figure to increase beyond 4% in the coming months. These persistent inflationary pressures are likely to intensify the financial difficulties faced by vulnerable households throughout the 2026-27 financial year.

Efforts to mitigate these outcomes would require targeted support from the government to alleviate the compounded impact of reduced incomes and rising living costs, though the Treasury has not yet issued a response to the projections.