EY Lifts UK 2026 Growth to 0.9% as Iran War Risk Could Trigger 2027 Contraction
Updated
Updated · OilPrice.com · Aug 3
EY Lifts UK 2026 Growth to 0.9% as Iran War Risk Could Trigger 2027 Contraction
3 articles · Updated · OilPrice.com · Aug 3
Summary
EY raised its UK growth forecast for 2026 to 0.9% but warned prolonged disruption to Gulf energy flows could cut growth to 0.5% this year and shrink the economy by 0.2% in 2027.
The forecast hinges on the Strait of Hormuz staying open, with the waterway carrying about one-fifth of global oil and gas supplies as well as other critical goods.
Inflation is still expected to reach 3.5% by year-end, but EY's adverse scenario shows it could jump to 6.4% within months if energy prices remain disrupted.
John Healey said the government cannot fully shield households and businesses from the squeeze, while EY said technology and business services may support growth even as construction costs stay more than 30% above 2019 levels.
Trump signaled on Sunday that a peace deal with Iran may be near, though markets and policymakers remain wary after an earlier memorandum collapsed and US-Iran strikes ended a 60-day ceasefire.
If the Strait of Hormuz remains closed, how will the UK survive a devastating inflation spike and a crippling winter energy crisis?
With UK construction already contracting, will prolonged shipping disruptions and soaring material costs trigger an unavoidable economic recession by 2027?