Spring Statement 2026: fiscal calm to fuel shock – what the Iran conflict means for catering costs
Overview
The UK Spring Statement 2026, delivered on 3 March, was positioned as a steady fiscal update rather than a major Budget event. Growth forecasts were revised down, unemployment expectations edged up, and inflation was projected to ease back towards target. Importantly for catering teams and foodservice operators, there were no immediate new tax measures affecting food, hospitality or employment costs.
When the Spring Statement was drafted by the Chancellor, the message was one of cautious stability.
However, global events since 28 February have since shifted the economic landscape dramatically.
Our thoughts are with all those impacted by the conflict and facing uncertainty and concerns over safety.
The escalation of conflict involving Iran, and the subsequent disruption to energy markets, has triggered a sharp rise in global oil prices. With shipping routes through the Strait of Hormuz under pressure and markets pricing in sustained geopolitical risk, oil and gas costs have moved quickly upward. These developments were not factored into the Spring Statement forecasts and will materially affect inflation, supply chains and operating costs in the months ahead.
As Oliver Hall, Founder & Director of allmanhall, explains:
“The Spring Statement pointed towards improving stability, but the escalation of the Iran conflict and the immediate rise in oil prices changes the operating landscape for catering teams almost overnight. Energy underpins every part of the food supply chain – from farming and production to transport and utilities – so volatility in oil markets will inevitably feed through into food costs. Now, more than ever, operators need clear data, strong supplier relationships and agile procurement strategies to stay in control.”
Before the geopolitical escalation, the key economic signals from the Spring Statement were as follows.
Major economic points from the Spring Statement
Growth forecast lowered: The Office for Budget Responsibility has downgraded its forecast for economic growth for this year to 1.1%, indicating slower economic expansion. It had previously forecast the economy would grow by 1.4% in 2026.
Unemployment forecast increased: Unemployment will peak at 5.3% this year, up from a 4.9% peak forecast at the Budget, and then fall gradually to 4.1% by 2030. This signals a softening labour market before gradual recovery, which may further dampen consumer spending, including on hospitality and catering.
Inflation expected to fall near target: Inflation is forecast to fall faster than previously thought, reaching 2.3% during 2026 before reaching the Bank of England’s target of 2% by the end of the year. This is a long way from the peak in October 2022 when prices were rising at a rate of 11.1% a year.
No direct tax changes on food or hospitality introduced.
However, those forecasts are now subject to significantly greater uncertainty if the impact of the US-Israel conflict with Iran persists.
The Iran conflict & rising oil prices
Since the Statement was written, a major geopolitical conflict involving Iran escalated (28 February 2026), disrupting global energy markets:
Shipping through the Strait of Hormuz, a vital export route for ~20 % of global oil and LNG, has been severely restricted, with tanker traffic falling sharply. Oil prices have spiked (e.g., Brent crude up sharply toward ~$80 or higher), and natural gas prices have jumped significantly in various markets. Markets are pricing in a ‘war premium’ that could persist, and analysts warn prices could move substantially higher if disruptions continue.
This conflict and market response were not factored into the Spring Statement forecasts and will materially change the economic backdrop for costs and inflation.
What does this mean for catering teams and foodservice operators?
Food & commodity costs: Food prices are already influenced by global energy costs (fuel for production, fertiliser, transport). Higher oil prices generally feed through to higher supply chain costs. The earlier expectation of inflation trending back toward target may now be offset by higher energy-driven inflation, particularly for transport, storage and food production input.
Action: Employing a dedicated procurement organisation to oversee supplier performance and ongoing pricing management, can play a pivotal role in securing competitive pricing and providing reassurance.
Logistics & delivery cost: Fuel costs are a major driver in distribution fees and logistics. With oil prices rising suddenly, supplier delivery charges are likely to increase, and third-party logistics providers may reprice routes, especially for long- haul and time-sensitive cargo.
Action: Engage your suppliers now to understand any impending freight cost changes, and factor higher delivery costs into meal costings, if you aren’t working with a procurement expert already.
Consumer demand & sector exposure: Slower growth, rising living costs, and energy cost inflation could dampen consumer spending on hospitality (event venues). Institutional sectors (schools, care, healthcare) may be more stable but still face squeezing budgets.
Action: Highlight cost-efficient menus without eroding quality – look at plant-rich proteins to replace more costly meat, for example.
Operational impacts: Energy cost inflation affects utility bills (gas & electricity), refrigeration, kitchen operations and heat generation, especially if gas price volatility persists.
Action: Consider energy-efficient operational adjustments (equipment scheduling, peak/off-peak usage).
Key takeaway
The Spring Statement’s economic picture was accurate at the time of its writing, but the outbreak of the Iran conflict and resulting surge in oil and gas prices will now materially affect costs, inflation and supply chains critical to catering teams and foodservice operators.
Unless you are already working with a food procurement expert, catering managers and foodservice operators should review budgets and forecasting assumptions urgently to incorporate higher energy prices, logistics costs and potential inflation knock-on effects for 2026 planning.
As Jo Hall, Co-owner & Managing Director of allmanhall, explains:
“Catering teams and foodservice operators are already balancing tight budgets, labour pressures and sustainability commitments. Sudden global shocks like this reinforce the importance of proactive procurement and forward planning. It’s not just about reacting to rising prices – it’s about using insight, forecasting and collaboration to protect both quality and financial stability for the long term.”
A time for agility and adaptability
Periods of uncertainty reinforce the value of trusted partnerships. With the right data, transparency and long-term collaboration, catering teams and foodservice operators can navigate volatility with confidence, protecting both your budgets and the communities you serve.
Now is the moment to stress-test budgets, revisit supplier agreements and ensure forecasting reflects the new energy reality. In an environment where global events can rapidly alter cost assumptions, procurement must be proactive, informed and resilient – not reactive.
The Spring Statement may have signalled stability, but the global backdrop tells a more complex story. For catering teams and foodservice operators, agility and insight will be critical in the months ahead.
If you want expert guidance through challenging times, find out how allmanhall can help you here.