The Return of the Cost-of-Living Crisis? Steve Herbert Considers the Implications for HR

Why It Matters

A renewed energy‑price shock would strain household budgets and corporate cost structures, forcing HR to act quickly on financial‑wellbeing programs. The broader economic fallout could reshape UK fiscal and monetary policy in 2026.

Key Takeaways

• Potential oil supply disruption could raise UK energy costs
• Inflation may climb 2% from 50% oil price jump
• Government fiscal strain limits ability to subsidize households
• HR must prioritize employee financial wellbeing strategies
• BoE tools insufficient for supply‑driven price spikes

Pulse Analysis

The looming threat to the Strait of Hormuz underscores how geopolitical tensions can quickly translate into domestic economic pain. When oil flow from the Middle East stalls, global benchmarks surge, and the United Kingdom, already grappling with post‑pandemic fiscal fatigue, faces higher utility bills and fertilizer costs. Analysts estimate that a 50% rise in oil prices could inject an additional two percentage points of inflation, reigniting price pressures that the Bank of England’s traditional interest‑rate toolkit cannot easily tame.

For businesses, the ripple effects extend beyond balance sheets to the personal finances of their workforce. Past crises, such as the 2022 energy shock, showed that employee stress and turnover spike when disposable income erodes. HR departments therefore need to move from reactive emergency measures to proactive financial‑wellbeing frameworks—offering salary advances, inflation‑linked bonuses, and robust financial‑education programs. Leveraging data from the pandemic and the previous cost‑of‑living surge can help design tiered support that aligns with varying employee needs while preserving morale and productivity.

Policy makers also face a delicate balancing act. With the Treasury’s war‑chests depleted by successive bailouts, large‑scale subsidies are unlikely, prompting discussions of demand‑side controls reminiscent of the 1970s, such as electricity rationing or reduced workweeks. Meanwhile, the Bank of England’s conventional monetary levers risk deepening debt burdens without addressing the root supply shock. This confluence of energy insecurity, limited fiscal space, and constrained monetary policy creates a perfect storm that HR leaders must navigate, positioning financial resilience as a core component of talent strategy for the coming years.