According to the Bank of England surveys, has the energy price shock from the Iran war led to increased wage demands in the UK?

No — the Bank of England surveys indicate that the energy price shock has not yet fueled wage demands. Firms marginally raised their wage growth expectations to 3.5% for the year ahead (from 3.4%), and most 2026 wage settlements — already agreed at an average of around 3.5% — show no impact from the Middle East conflict so far. BOE agents reported that the war has had 'little impact on the labor market' and that wage pressures are easing, with a looser jobs market observed.

What do the Bank of England’s latest surveys reveal about firms’ pricing plans and their concerns regarding demand and profitability?

Firms plan their largest price hikes in over two years, expecting to raise prices by 4.4% over the next year — up from 3.7% in March — reflecting surging energy costs. However, they are cautious, as profit margins are already squeezed and they worry that passing on costs will hurt demand, especially for non-essential goods and services. The BOE concluded firms 'seem minded to pass on at least some of the cost rises' but will do so cautiously, closely monitoring competitors’ actions.

Bank of England Surveys Indicate Energy Shock Not Fueling Wages

Apr 24, 2026

UK firms plan significant price hikes due to energy costs from Middle East conflicts, yet wage pressures remain low per Bank of England surveys. Policymakers will weigh these inflation risks against slowing demand before setting interest rates.

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