Britain faces significant poverty challenges, with child poverty at a record high and destitution rising, driven by housing costs, stagnant wages, and policy choices. While not all groups are equally affected, there is deepening hardship for many, particularly children, ethnic minorities, and disabled households.
The United Kingdom’s participation in any new war could place strain on the UK financial system. The Israel-Iran conflict has already driven Brent crude oil prices up by approximately $10 per barrel to $78 in June 2025, with fears of further escalation potentially pushing prices significantly above $100, if the Strait of Hormuz is disrupted. About 20% of global oil and 20% of liquefied natural gas (LNG) pass through this critical chokepoint. A blockade or significant disruption could severely constrain global oil supply, spiking prices. Higher oil prices would increase energy costs, directly affecting UK households through elevated petrol prices (potentially rising by 5p per litre in the short term) and gas bills. This would exacerbate inflationary pressures. Rising inflation could force the Bank of England to maintain or raise interest rates, increasing borrowing costs for households and businesses. This could dampen consumer spending and investment, potentially slowing economic growth (UK GDP already contracted by 0.3% recently). Higher yields on UK gilts (government bonds) could also strain public finances, as debt servicing costs rise.
The UK is deploying additional RAF jets to the Middle East for “contingency support” amid the Israel-Iran conflict, signaling potential military readiness. Direct participation, such as defending Israel against Iranian missiles or providing logistical support, would incur significant costs. Historical precedent, like the Iraq War (2003–2009), saw the UK spend over £8 billion, with long-term economic costs.
The UK’s Consumer Price Index (CPI) inflation is already at 3.5% as of June 2025, and further increases could strain household budgets, particularly for low-income groups already facing poverty (21% of the population, or 14.3 million people, live below the poverty line).
In 2022-23, 21% of the UK population (14.3 million people) were in poverty, defined as living in households with income below 60% of the median after housing costs. The number of people in poverty has remained relatively stable since the mid of 2000s, with no sustained decline in over 20 years.
Child poverty reached a record high in 2023-24, with 4.45 million children (31% of UK children) living in relative poverty after housing costs, up by 100,000 from the previous year. The West Midlands (36%) and London (35%) have the highest child poverty rates, driven largely by high housing costs in the capital. Larger families (three or more children) face a 44% poverty rate, exacerbated by policies like the two-child benefit limit.
In 2022, 3.8 million people, including over 1 million children, experienced destitution, unable to afford basic needs like food, warmth, or shelter—a 61% increase since 2019. Food insecurity is rising, with 9.3 million people (including 3 million children) facing hunger and hardship in October 2024, a 46% increase in child hardship over two decades. The Trussell Trust reported 760,000 first-time food bank users between April 2022 and March 2023, highlighting the scale of need
London has a high poverty rate driven by housing costs. Social renters as well as private renters pay more than elsewhere in the UK. Ethnic minorities face higher poverty rates: 53% of Bangladeshi, 47% of Pakistani, and 51% of Black children live below the poverty line, compared to 24% of white children. Households with a disabled member (44% of children in poverty) or single parents face elevated risks, often due to employment barriers and insufficient benefits.
The cost-of-living crisis, fueled by inflation (3.5% in June 2025) and stagnant wages, has deepened poverty. The Office for Budget Responsibility forecasts no real wage growth from Q1 2025 to Q1 2029, and benefits are only keeping pace with inflation, not closing the gap. The last sustained poverty reduction occurred under Labour from 1999-2000 to 2004-05, driven by policies like Child Tax Credit. Since then, progress has stalled. The welfare state post-1942, including family allowances, significantly reduced poverty by the 1950s, but challenges like low pay and housing costs persist.
Temporary measures during the pandemic, like the £20 Universal Credit uplift, briefly reduced poverty, showing policy can make a difference. However, structural issues—high housing costs, low wages, and benefit cuts—continue to entrench poverty, and forecasts suggest further increases without significant intervention.
In such a scenario, Increased defense spending would strain the UK’s public finances, already under pressure from a high debt-to-GDP ratio (around 100% as of 2025). The government’s recent welfare cuts, projected to push 250,000 more people into poverty, suggest limited fiscal space for additional military expenditure. Funding a war effort might require higher taxes or borrowing, both of which could exacerbate economic hardship for low-income households and small businesses.
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