UK Business Growth Slows on Middle East Cost Surge

British business activity expanded at its slowest pace in six months in March, as manufacturers faced the sharpest rise in input costs since 1992, driven by escalating conflict in the Middle East. The S&P Global flash composite Purchasing Managers' Index, which covers manufacturing and services sectors, fell to 51.0 from 53.7 in February, marking the lowest reading since September and signaling a slowdown amid persistent growth above the 50 threshold that separates expansion from contraction.

The survey, released on Tuesday, highlighted the direct impact of the U.S.-Israeli war on Iran, which began on February 28 and has disrupted global energy markets and supply chains. Higher oil prices, reaching as much as $105 per barrel, fueled surges in costs for fuel, transportation and energy-intensive raw materials. Manufacturers' input prices index jumped to 70.2 in March from 56.0 the previous month, the largest monthly increase since October 1992, following the sterling crisis known as Black Wednesday when the UK exited the European Exchange Rate Mechanism.

"This is just the start," said Paul Dales, chief UK economist at Capital Economics. "The conflict in the Middle East is already...