UK SMEs warn Iran war could push exporters towards bankruptcy

UK SMEs trading internationally are warning of severe financial pressure as disruption linked to the Iran war drives up logistics, energy and foreign exchange costs.

New research from Bibby Financial Services found that 70% of UK SMEs trading overseas fear they could be pushed into bankruptcy if disruption continues. The report said firms have lost £38,207 on average since the start of the crisis.

The findings come from BFS’s 2026 Trading Places Report, which surveyed more than 500 UK importers and exporters this month.

Nearly half of SMEs surveyed said global conflicts are now the biggest economic challenge they face, up 10% from last year. More than half said their business is in a more precarious position than when Russia invaded Ukraine in 2022.

Supply chain disruption is putting the heaviest strain on cashflow. BFS said 61% of SMEs identified rising shipping and logistics costs, including energy and insurance, as the biggest contributors to financial pressure. Disruption linked to the Strait of Hormuz has affected 58% of firms.

The pressure is also feeding into currency risk. More than half of businesses surveyed cited oil and energy-driven inflation as their biggest foreign exchange concern.

Michael McGowan, Managing Director at Bibby Foreign Exchange, said UK importers and exporters were already under pressure from inflation, higher interest rates and Brexit, and that the Iran war had amplified those challenges.

“Businesses are facing a stark choice: absorb rising costs and see margins collapse or pass them on and risk losing customers,” he said.

More than half of exporters expect overseas volumes to fall, while 56% said volatility is pushing them to refocus on domestic markets.

For trade and working capital finance providers, the findings underline how geopolitical disruption is moving quickly from supply chain risk into cashflow pressure, margin strain and export finance demand.