Economics Observatory | Insights on the UK and global economy

How can the West of England contribute to UK economic growth?

The West of England has a highly educated and skilled workforce, globally competitive universities and leading industrial clusters. Yet there are wide inequalities across the region, and the potential for growth is constrained by problems with transport, housing affordability and lack of investment.

Banks & financial markets

How might distressed fintech firms affect UK growth and private debt?

Rare cases of severe losses in large fintech firms – what are known as black swan events – may harm UK growth and significantly increase debt among households and small businesses. Current regulations are adequate for addressing this tail risk, but there are challenges in enforcement.

Prices & interest rates

How might the Middle East conflict shape Europe’s inflation outlook?

The immediate economic fallout from war in the Middle East lies in the spikes in oil and gas prices, and in major disruptions to aviation and shipping. The countries most vulnerable to future inflation from the shocks are those that combine energy import dependency with weak external balances.

DATA HUB

US fuel prices 2025-26

US petrol prices have surged since the US-Israel strikes on Iran began Feb 28. Regular gasoline is up 27% in 3 weeks ($2.94→$3.72/gal). Diesel has risen even faster: +33%, now $5.07 and within $0.74 of its all-time record.

Compare with last June's 12-day US-Israel-Iran conflict. Gasoline barely moved (+$0.10, quickly reversed). Diesel rose ~$0.30 then retreated. With strikes on gas fields continuing, expect prices at the pump to rise further still.

Prices & interest rates

Could tensions between Iran and Israel trigger a new wave of inflation?

The immediate inflationary impact of widening conflict in the Middle East is likely to be limited. But potential trade and supply chain disruptions, weakening business sentiment and elevated uncertainty could have major consequences for the global economy. Governments face tough budgetary choices.

MAGAZINE

Read the latest edition of our magazine here

Despite facing unprecedented sanctions on its energy exports, Russia continues to earn hundreds of billions of dollars a year from oil and gas – directly funding military aggression in Ukraine. While sanctions have had a noticeable impact, they have failed to end the war.

Trade & supply chains

Sanctions effectiveness: what lessons three years into the war on Ukraine?

Western countries imposed extensive sanctions on Russia after the invasion of Ukraine in February 2022. But the measures were unilateral and piecemeal – and while they have been effective in disrupting the Russian economy, evasion and ‘trade deflection’ through third countries limits their impact.

Public spending, taxes & debt

Why do some people in the UK face marginal tax rates of over 60%?

Various adjustments to Britain’s tax and benefit system have created sharp spikes in marginal tax rates. Some families take home less than 40p of each extra pound they earn, blunting incentives to work or take promotions.

Nations, regions & cities

What role could migration play in the reconstruction of Ukraine?

Russia’s full-scale invasion of Ukraine has triggered the largest refugee crisis in Europe since World War II, with nearly six million Ukrainians displaced worldwide. This creates a critical challenge looking ahead to post-war reconstruction. With over 200,000 Ukrainians currently here in the UK, policy-makers must consider both the current needs of refugees and how the diaspora can help to support economic recovery in Ukraine.

Trade & supply chains

Global defence spending: What next for European military procurement?

With its fragmented production process, European defence procurement is inefficient and uncompetitive in comparison to the United States. A new approach, prioritising cross-country collaborations, could improve things, but would not be without its own challenges.

Jobs, work, pay & benefits

What do we know about the effects of military conscription?

Mounting national security threats have led a number of European countries to consider reinstating mandatory military service. Proponents argue that it would bolster national defence and boost citizenship among young people. But evidence on either effect is scarce or points to the opposite outcome.

Productivity & growth

How could falling birth rates reshape the global economy?

More than two-thirds of humanity now live in countries where fertility has fallen below the level needed for a stable population. This fundamental demographic shift is transforming economies, raising questions about ageing populations, shrinking workforces and the sustainability of welfare states.

Lessons from history

Can researchers predict conflicts and their consequences?

Wars have many economic, political and social consequences. From changes to technology, to the re-drawing of borders, to mass losses of life, conflicts shape human history. They are also extremely challenging to predict – both in terms of their causes and effects.

News

Baby bust

This week at the Economics Observatory, we explore issues around falling fertility and ageing populations – from why people in rich countries are having fewer children to the global economic consequences, and how demographic factors such as age shape wellbeing.

Attitudes, media & governance

How are geopolitical risks affecting the world economy?

Geopolitical risks posed by elections, polarisation and conflicts within and between states have inevitable knock-on effects on the economy, both globally and for individual countries. This year more than ever, managing these risks and shoring up institutions that promote stability are essential.

All Answers