24th March 2026
In 2022, the UK Government responded to the energy crisis with sweeping support. The Energy Price Guarantee alone cost £27 billion, and total support reached £62 billion. It was expensive, blunt, and politically unavoidable.
But the fiscal landscape today is far worse.
Borrowing remains high, debt has climbed to around 96 percent of GDP, and debt‑interest payments have exploded to £90 billion far above what was expected just a few years ago. Rising inflation expectations are pushing gilt yields higher, making government borrowing even more expensive.
In this context, another blanket support package is simply not affordable. The government will be forced to choose between targeted help cheaper but limited — or doing very little at all. A £53 million heating‑oil grant has been announced, but this is a drop in the ocean compared to the scale of need.
Why Rural Scotland Feels These Shocks First
For communities across the Highlands and Islands, this crisis is not an abstract macroeconomic story. It is a lived reality.
Heating oil users face immediate price spikes.
Long supply chains mean higher transport costs feed directly into food prices.
Public services already stretched must absorb higher energy bills without additional funding.
Local businesses operate on thin margins and cannot easily absorb cost increases.
Councils like Highland and Moray, already struggling with structural deficits, face yet another financial blow.
Rural Scotland has always been the canary in the coal mine for national economic fragility. When systems are stretched, when supply chains wobble, when inflation returns, it is the rural and remote areas that feel the pressure first and longest.
A Moment of Reckoning
The Iran conflict has exposed a deeper truth: the UK has not rebuilt resilience since the last energy crisis. We remain heavily dependent on global markets, vulnerable to geopolitical shocks, and constrained by public finances that leave little room for manoeuvre.
This is not simply a story about oil prices or inflation forecasts. It is a story about the fragility of essential systems — energy, public services, supply chains — and the consequences of running them too close to the edge.
For rural Scotland, the lesson is familiar. When the world becomes unstable, the distance from London feels even greater. Support arrives slowly, if at all. Local services absorb the shock. Households tighten their belts. Communities adapt because they must.
But the bigger question remains: how many more global crises can the UK absorb before the lack of resilience becomes impossible to ignore?
This latest energy shock is not the first warning. It will not be the last. But it is a reminder — sharp and unwelcome — that stability is not something we can take for granted, and that the costs of inaction fall heaviest on the places least able to bear them.
The above is s summary of an article published on 23 March 2026 by Fraser of Allender Institute. Read the full article at
[url=https://fraserofallander.org/the-iran-war-inflation-and-the-public-finances/]The Iran War, inflation and the public finances[/url]