UK government has space for fiscal loosening

Significance

The UK economy is not as directly exposed to the conflict as other European countries, but economic weakness in the EU will have knock-on effects for the United Kingdom. The Ukraine war coincides with a cost-of-living crisis, with many household energy bills expected to rise by at least 50% in April.

Impacts

• The UK government will prioritise investment in nuclear and renewable energy to reduce dependence on imports.
• UK-EU trade tensions could return when efforts to implement the Northern Ireland protocol resume in the summer.
• The cost-of-living crisis threatens to undermine support further for the ruling Conservative Party in May’s local elections.