Reacting to: UK economy tipped to stall as Iran war chokes growth (City A.M.) →

City A.M. reported this week that the UK economy is expected to have flatlined again in May, with forecasters pencilling in growth of around -0.1% to zero, following a 0.1% contraction in April. That's a marked slowdown from 0.3% growth in March and 0.4% in February. The report points to the ongoing conflict involving Iran as a key driver — pushing up fuel and energy costs and weighing particularly heavily on the services sector, while construction and manufacturing offered some offsetting growth in April.

The bit that should worry small businesses most

Buried in the report is a warning from food industry leaders that food inflation could spike “by as much as 10 per cent later this year” as a result of the conflict's impact on costs. Deutsche Bank's Sanjay Raja described services activity as “sluggish” through May, specifically calling out finance, professional services and real estate as areas of weakness. Chancellor Rachel Reeves acknowledged the impact directly, saying it “was not a war we wanted or joined, but one that will have an impact at home.”

Why this is a cashflow story, not just a headline number

A stalling economy and rising input costs don't show up as a single dramatic event for most small businesses — they show up as margin quietly eroding, supplier prices creeping up faster than you've adjusted for, and customers taking a little longer to pay because they're feeling the same squeeze. None of that is necessarily visible from a bank balance alone, which is exactly why this is the wrong moment to only be looking at the numbers once a year, or once a quarter, at the last minute.

What actually helps in a period like this

Regular visibility over cash position, margin and what's actually owed to you is the difference between spotting a squeeze early, while there's still room to act, and discovering it three months later when the options have narrowed. We cover the mechanics of doing this properly in our recent piece on how to read a cashflow forecast, and it's exactly what we build into management accounts for clients — monthly reporting that shows where the pressure is building, rather than finding out about it after the event. Periods of genuine economic uncertainty are exactly when that visibility earns its keep the most.