UK service sector shrinks amid Iran war disruption and heatwave; FTSE 100 hits four-month closing high – business live
News Source
•Fri, 03 Jul 2026 15:42:09 GMT
📰 What Happened
The UK service sector shrank in June for the first time since January 2023. The downturn was caused by disruption from the Iran war and a heatwave that kept customers away. Services firms also cut jobs as demand dropped. At the same time, the FTSE 100 stock index hit a four-month high, reaching 10,701 points. Oil prices fell back to pre-war levels. Global food prices dipped in June. Meanwhile, traffic through the Strait of Hormuz increased after earlier war disruption.
🔍 The Backstory
The UK service sector includes businesses like restaurants, shops, banks, and hotels. It makes up about 80% of the UK economy, so when it shrinks, it is a big deal. The war in Iran has caused higher fuel prices, disrupted shipping routes, and made businesses nervous about the future. The Strait of Hormuz is a narrow waterway where a large share of the world's oil passes through. Any disruption there affects oil prices globally. June also saw a heatwave in the UK that kept people indoors and hurt business for many service companies.
🎯 Why It Matters
A shrinking service sector can mean fewer jobs and lower pay for workers. It also affects prices for everything from restaurant meals to insurance.
The UK service sector shrank in June for the first time since January 2023. The downturn was caused by disruption from the Iran war and a heatwave that kept customers away. Services firms also cut jobs as demand dropped. At the same time, the FTSE 100 stock index hit a four-month high, reaching 10,701 points. Oil prices fell back to pre-war levels. Global food prices dipped in June. Meanwhile, traffic through the Strait of Hormuz increased after earlier war disruption.
The UK service sector includes businesses like restaurants, shops, banks, and hotels. It makes up about 80% of the UK economy, so when it shrinks, it is a big deal. The war in Iran has caused higher fuel prices, disrupted shipping routes, and made businesses nervous about the future. The Strait of Hormuz is a narrow waterway where a large share of the world's oil passes through. Any disruption there affects oil prices globally. June also saw a heatwave in the UK that kept people indoors and hurt business for many service companies.
A shrinking service sector can mean fewer jobs and lower pay for workers. It also affects prices for everything from restaurant meals to insurance.