UK Weekly Digest: The Consequences of Peace – What a MoU means for the UK

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UK Weekly Digest: The Consequences of Peace – What a MoU means for the UK

Deutsche Bank

Research

Europe Economics Date

United Kingdom 19 June 2026

UK Weekly Digest

The Consequences of Peace – What a

MoU means for the UK

Sanjay Raja

This week saw the US and Iran come to a memorandum of understanding around

Chief UK Economist

a way forward. This is good news for the economy. In short, this gives the UK +44-20-754-50530

stronger economic momentum on the margins, could add to some upside to

employment, and some downside to inflation. Maui Brennan

Economist

In this weekly, we take brief stock on the relative magnitudes of risk around our

central projections should the MoU last and what this could mean for GDP growth,

unemployment, and inflation.

The Audacity of Hope: implications for the UK economy

The drop in energy prices will be a tailwind for the UK economy. We look at the

potential shifts that could come should these levels stick.

Growth: At the peak of the crisis, we knocked down our GDP forecasts by around

0.3pp. A stronger first quarter offset much of the anticipated weakness, however,

with activity lifted by household consumption (+0.6% q-o-q), business investment

(+1.7% q-o-q), and stockpiling (which rose to GBP 4.6bn).

The good news is that the drop in oil prices will start to alleviate pressures on

household budgets, whilst also opening up space for businesses to invest and hire.

What could this mean for growth in the near-term? As a reminder, our World

Outlook projections were predicated on an US-Iran MoU taking oil prices to USD

86/barrel in Q4 and USD 80/barrel in 2027. Current prices point to a modest fall

relative to these levels, with H2-26 oil futures tracking around USD 78/barrel and

2027 oil futures priced at around USD 75/barrel.