UK economy faces stagflation risk as Middle East conflict bites. Flash PMI data reveals the sharp economic impact of geopolitical tensions. The Composite PMI Output Index dropped to 51.0 in March from 53.7 in February, marking a six-month low and signaling a significant slowdown in growth across manufacturing and services sectors. Simultaneously, inflationary pressures have intensified due to rising energy prices and disrupted supply chains caused by the conflict. Companies report direct business losses attributed to the geopolitical events. This combination of slowing growth and accelerating inflation presents a challenging environment for policymakers and investors, as the traditional trade-off between these two economic forces becomes increasingly difficult to manage.
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