Economics Observatory | Insights on the UK and global economy

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On Thursday 7 May, voters across England, Scotland and Wales will head to the polls. This week at the Economics Observatory, we have been examining the parties’ prospects – and what the economic backdrop tells us about how and why the political map is shifting.

Nations, regions & cities

Senedd election 2026: what are the big economic issues?

The 2026 election for the Welsh parliament is likely to produce a seismic result, one that would end over a century of Labour dominance in Wales. Two blocs of parties offer different visions for a time of high economic uncertainty and worrying trends in employment, earnings and living standards.

Nations, regions & cities

UK local elections 2026: what are the prospects in Manchester?

Elections in the ten boroughs of Greater Manchester provide voters with an opportunity to pass judgement on Labour nationally. But the results may also reflect views on what’s been happening across the city-region, where productivity growth has been strong, and public health and transport improved.

DATA HUB

War in Iran sees fuel prices continue to surge

US petrol prices have surged since the US-Israel strikes on Iran began Feb 28. Regular gasoline is up 35% in 4 weeks ($2.94→$3.96/gal). Diesel has risen even faster: +41%, now $5.38 and within $0.44 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.

Nations, regions & cities

Scotland’s parliamentary election 2026: what are the big economic choices?

Longstanding questions around Scotland’s constitutional future remain open. But the more immediate challenges are economic and fiscal. Slow growth in living standards, an ageing population and rising public spending pressures mean that the next parliament will face difficult budgetary choices.

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For nearly three decades, Labour has depended on the capital as a rock-solid source of parliamentary strength. After the local election votes are counted, the party will have to think long and hard about whether it has taken London for granted and now risks being ejected from its safest seats.

Aid & international development

How is the conflict in the Middle East affecting developing economies?

Developing countries are often vulnerable to fuel price shocks caused by global geopolitical tensions. As well as raising the costs of key items such as petrol and food, conflicts like the Iran war can force affected governments into expensive subsidies, further damaging already weak economies.

Public spending, taxes & debt

UK national security: what have we learned from strategic defence reviews?

The history of British defence policy has been one of constant imbalance between resources, capability and commitments, interspersed with reviews that fail to solve the fundamental problems. These appraisals are typically done at times of economic crisis when public expenditure must be controlled.

Transport & infrastructure

Are more trains the answer to economic struggles in the North of England?

More often than not, the political answer to the North of England’s economic challenges is more trains. Yet while fresh investment in rail infrastructure may boost prosperity in certain places, it isn’t the catch-all solution that some politicians present it to be.

Nations, regions & cities

Why don’t we have nicer buildings?

The benefits of distinctive urban architecture extend far beyond the buildings themselves, but the costs are borne by the developers. This can lead to underinvestment in high-quality design – and it raises the question of whether policy should encourage better architecture.

Nations, regions & cities

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.

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.

Trade & supply chains

What effects have energy sanctions had on Russia’s ability to wage war?

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.

All Answers