Donald Trump and Iran have reached a two-week cease-fire agreement, meaning the Strait of Hormuz will finally reopen. Giving other countries economic ease.
People across Northern Ireland have already been feeling the effects of the ongoing Middle East conflict, as rising energy prices, inflation, and other costs have directly impacted them.
Prime Minister Keir Starmer warned that the war is likely to have lasting consequences. He said the conflict, now entering its second month, “will affect the future of our country”.
Although the ceasefire offers hope that the end of the conflict is imminent, it remains unpredictable what will follow in the coming weeks. The only thing that’s certain is that the damage is done, inflation has risen, and people in Northern Ireland are going to continue to suffer economically and be worse off than the Republic of Ireland and European neighbours.
How has the war affected people of Northern Ireland?
Fuel prices and cost of Living pressures:
One of the most immediate impacts is in correlation with oil and gas prices. Due to the Strait of Hormuz re-opening, oil rationing is no longer necessary.
Although oil and natural gas prices have fallen today, they are likely to remain elevated compared to earlier in the year
Petrol and diesel prices surged in March following disruption to global oil supplies, with the average price of unleaded rising by around 20p per litre over the month.
For many households in Northern Ireland, where oil heating is widely used, this could mean a sharp increase in both transport and home energy costs.
With inflation already high, rising energy costs are expected to further squeeze household budgets, leaving many families with less disposable income.
Economic slowdown fears
According to the Organisation for Economic Co-operation and Development, the UK is facing one of the biggest hits to economic growth among major economies.
While N Ireland’s economy grew by 1.6% in 2025, there are now signs that growth is slowing as global instability takes hold and inflation continues to rise.
The Bank of England has also warned that the UK’s economic outlook has “deteriorated”, with higher borrowing costs and inflation likely to follow.
Alan Bridle, Bank of Ireland UK Economist, has cautioned that some Northern Ireland businesses are potentially navigating their second major reset in operating costs within just a few years.Addressing business leaders recently at a local business breakfast hosted by Bangor Chamber of Commerce Alan Bridle said: “While markets remain volatile and react spontaneously to the latest news from the Middle East, the economic and financial consequences are becoming increasingly evident for both businesses and households”.
He outlined that although “stagflation” scenarios are being modelled, the current situation is unlikely to be a precise re-run of the period which followed the outbreak of the Ukraine war, which came shortly after the surge of pent-up post-pandemic demand price pressures, and when monetary and fiscal policies alongside the labour market were in a different place.
“Local businesses have also had to absorb a significant policy-driven increase in employment costs since then.” he said.
Impact on local businesses
Noting that direct exposure of local businesses to the Middle East conflict is relatively small, he suggested that some are already beginning to experience the indirect impacts and second-round effects stemming from disruption at the Strait of Hormuz. “Beyond the immediate pressure of rising energy prices, the impacts on various raw materials and supply chains will likely ripple through sectors, including transport, freight, packaging, insurance, fertiliser and food” he said.
“Overall the magnitude of the cost reset is likely to depend on the duration of hostilities and the durability of any peace agreement. Even if restrictions are eased, the Strait of Hormuz may remain a chokepoint of vulnerability.
“For local firms, costs, profitability and cash flow will potentially be impacted in a number of ways, although the effects will vary significantly by sector depending largely on energy intensity.”
Looking ahead, however, Alan said pressure on operating margins may come from a number of sources including lower revenues as higher inflation and a potential economic slowdown weigh on consumer spending and shoppers increasingly look to value brands as household budgets tighten.
“At the same time, businesses face increased input costs from potential disruptions to raw materials, rationing and additional transport costs, and while reorienting toward closer markets may improve supply chain security in the medium term, it may come at the expense of efficiency.”
What businesses should do now
To help businesses, Niall Devlin, Head of Business Banking NI, Bank of Ireland is urging companies to take a proactive approach to the current situation and provided some key priorities for businesses to consider:
“In today’s world, geo‑political uncertainty is no longer a distant concern, it’s influencing shaping day‑to‑day decisions of SMEs locally and internationally. Supply chain pressures and cost volatility are real business considerations and for many businesses the challenge is knowing how to strengthen resilience without slowing growth.
“There are steps businesses can and are taking now to protect themselves. Diversifying suppliers, improving cash‑flow forecasting, and building robust scenario plans all help reduce exposure to global shocks. But equally important is making the most of the cash they may already have. We offer a range of business savings solutions, from fixed term to flexible and instant access options, to make cash work harder, which is important in times of wider uncertainty.
“If you’re unsure where to start or want to explore ways to strengthen your business’s resilience, talk to us, we have Business Managers right across Northern Ireland who are ready to help you protect, grow and achieve your business ambitions.”
Concluding his remarks, Alan Bridle said: “We might take reassurance in the knowledge that local firms have demonstrated a resilience to repeated shocks over the past decade and will have muscle memory and a playbook to call upon from recent other crises.”
Is Northern Ireland worse off than the Republic?
There are growing questions about whether people in Northern Ireland could be hit harder than those in the Republic of Ireland.
Experts suggest the Republic may be better positioned to cope due to stronger public finances and EU membership, which allows access to shared energy strategies and financial support.
In contrast, Northern Ireland remains tied to the wider UK economy and energy pricing structures, as well as post-Brexit trade pressures.
Prime Minister Keir Starmer has acknowledged that Brexit caused “deep damage” to the UK economy, making it less resilient to global shocks.
The reality is that rising costs have been felt across the island, and the UK’s inflation is at an all -time high. Raising questions about whether one Irish household should be more exposed to global shocks than another.
Aidan Meagher, EY Ireland Partner and Co-Head of Geopolitical Strategy, said: “The announcement of a two-week ceasefire in the Middle East is very welcome news, and any de-escalation is positive from both a humanitarian and wider economic perspective.
“Markets have responded well, with oil and gas prices down significantly, global stock markets up and bond markets rallying. However, it is important to remember that a ceasefire does not mean an immediate return to normal.
“The conflict has resulted in unprecedented disruption to energy markets, shipping routes and global supply chains, and these effects will take significant time to unwind, even if the ceasefire holds. We should expect continued volatility in the near term as supply chains rebalance, inventories are rebuilt, and costs work through the system.
“For businesses, this latest series of events underscores how geopolitics is now central to business decision‑making. It reinforces the importance of resilience – stress‑testing supply chains for duration, diversifying sourcing where possible and maintaining flexibility across logistics – while looking more strategically at where new markets and growth opportunities may emerge.
“It also reinforces the strategic importance accelerating investment in sustainable and secure energy produced here in Ireland – whether that is micro generation at an individual business level or wind, solar, battery and strategic gas reserve projects at a national level.
“While the ceasefire is a positive step, recent weeks have been a clear reminder that geopolitical risk now feeds directly into economic and business outcomes. Planning for prolonged uncertainty, rather than assuming stability, is now a defining feature of business strategy in 2026 and beyond.”
Political response
A Sinn Féin spokesperson said the conflict had already caused “economic shockwaves across the globe”.
They added that Northern Ireland households are particularly vulnerable due to reliance on oil heating, with rising prices adding to the ongoing cost of living crisis. The party said its ministers are pushing for a support package from the UK government, including calls to reduce fuel duty.
They also argued that the Irish government, with a strong budget surplus, is better positioned to support households.
The Democratic Unionist Party did not respond to a request for comment.
SLP Leader of the Opposition Matthew O’Toole MLA has lambasted the leadership of the Executive for its inexcusable silence during an international crisis which has sent household energy and fuel costs rocketing.
Matthew O’Toole said: “The Executive’s radio silence at a time of crisis has been inexcusable. People in Northern Ireland are the most reliant on both vehicle fuel and home heating oil in these islands, but Ministers have had little to say other than writing letters to London and the occasional photo opportunity or dinner.
“At a time when Ministers and MLAs are getting a healthy pay rise despite continued poor performance, it will prompt anger and incredulity that local Ministers cannot even make progress in delivering a package of support with the funding that has been made available to them.
“Next week, Stormont will return – as no doubt will the tired sham fights between the two main parties who have collectively failed to offer leadership at a time of acute crisis for ordinary families. It is another damning indictment on our failed politics in need of fundamental change.”
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