Strait of Hormuz Closure Could Cripple UK Economy, EY Warns

A recent report from EY has warned that the closure of the Strait of Hormuz could have severe consequences for the UK economy. If the strait remains shut into mid-2027, the UK economy is expected to shrink by 0.2% next year. Additionally, growth in 2026 is predicted to slow down to just 0.5%. The report highlights that energy disruptions will be a significant factor in this decline.

The closure of the Strait of Hormuz would lead to reduced energy supplies, which could cause inflation to soar to 6.4% by the end of 2026. This is much higher than the expected peak of 3.5% if the strait reopens soon. Rising prices would likely result in people spending less and businesses holding back on investments, making it even harder for the UK economy to recover.

However, there is a glimmer of hope. If the Strait of Hormuz reopens by September 2026, growth could pick up again, with predictions of 0.8% in 2026 and 1.2% in 2027.