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EY warns UK could face recession if Hormuz strait stays closed
EY estimates UK GDP could slow to 0.5% in 2026 and contract 0.2% in 2027 if the waterway remains shut through early or mid-2027.
The Guardian Business reports that EY warned the UK economy could slip into recession next year if the Strait of Hormuz remains closed, citing continued disruption to global oil and gas flows. EY said the outcome would depend on how long the waterway stays shut, given its role in moving a fifth of the world’s oil and gas.
In EY’s scenario if the strait is not resolved, the consultancy projects UK GDP could slow sharply to 0.5% this year and contract by 0.2% next year, with the closure lasting until early or mid-2027. If the strait reopens by the end of the third quarter of this year, EY’s base case forecast calls for growth to remain resilient, at 0.9% in 2026 and 1.2% in 2027.
The outlet says EY also highlighted that ongoing uncertainty could test the UK’s resilience, even after upgrading its 2026 growth estimate from 0.8% to 0.9%. It added that an extended closure into 2027 could raise inflation and push the economy into contraction, while the UK may increasingly rely on technology and high-value business services as growth becomes harder to sustain.
Separately, the report notes EY pointed to continued pressure in construction, warning that rising project costs, persistent labor shortages, and weak productivity growth could constrain major infrastructure delivery even as demand remains high. The consultancy said improving productivity would be critical to support the UK’s infrastructure ambitions while sustaining broader economic performance.