Full Breakdown
Impact of the Iran War on Small Businesses in the UK and Egypt
4/7/2026, 4:19:01 AM
Rising Energy Costs in the UK
The ongoing conflict in Iran has significantly impacted small and medium-sized enterprises (SMEs) in the UK, particularly those reliant on heating oil. As the war escalates, heating oil prices have surged, with reports indicating that costs have more than doubled in recent weeks. Approximately 7% of UK SMEs utilize heating oil for heating and hot water, with this figure rising to 17% among rural businesses that lack access to the gas grid. The Federation of Small Businesses (FSB) has noted that many businesses are now rationing fuel to manage these unprecedented price hikes. For instance, Anthony Jenkins, a hotel owner in North Yorkshire, reported that his supplier raised prices from 54.9p to 129p per litre within a few months.
The FSB has called for the UK’s competition watchdog to investigate the heating oil market, citing concerns over potential exploitation by rogue energy brokers during this crisis. Tina McKenzie, the FSB's policy chair, emphasized that small businesses do not benefit from the same consumer protections as households, leaving them vulnerable to unfair practices.
Financial Strain on Small Businesses
A recent survey conducted for Novuna Business Finance revealed that UK small businesses anticipate an average increase of £2,273.90 in monthly costs due to rising energy prices. This includes an average of £753.56 more for transport and logistics, £785.92 for machinery operation, and £734.42 for heating. The survey indicated that 82% of small businesses have already felt the impact of these rising costs, with many considering price increases for their customers as a necessary response.
In addition to raising prices, 20% of small business owners are reassessing their funding arrangements to secure more working capital, while 17% are exploring renewable energy options to mitigate costs. The potential for job losses looms, with 16% of businesses indicating they may need to reduce staff due to financial pressures.
Energy Restrictions in Egypt
Similarly, small businesses in Egypt are facing challenges due to energy restrictions linked to the US-Israel war on Iran. The Egyptian government has implemented early closing orders to conserve electricity, disrupting nightlife and affecting businesses reliant on evening foot traffic. Prime Minister Mostafa Madbouly reported that Egypt's monthly energy import bill has more than doubled, leading to significant economic strain.
The early closing hours have particularly impacted the informal economy, which constitutes about two-thirds of employment in Egypt. Economists warn that reduced operating hours are detrimental to small businesses, with many losing substantial revenue. For instance, cinemas are experiencing a 60% drop in income due to the loss of late-night screenings, while tourism-related businesses are also suffering.
Official Responses and Future Outlook
In both the UK and Egypt, officials are aware of the challenges posed by rising energy costs and have indicated a need for regulatory measures to protect small businesses. In the UK, Ofgem has reminded energy suppliers to treat customers fairly amid the crisis. In Egypt, the government has introduced measures such as fuel price hikes and remote work initiatives to manage the situation.
As the conflict in Iran continues, small businesses in both countries are adapting to a rapidly changing economic landscape, with many exploring innovative solutions to mitigate the impact of rising energy costs.
