UK Economy at Risk of 2027 Recession if Strait of Hormuz Remains Closed

Global consultancy firm EY has issued a dire warning that the UK economy will likely plunge into recession by 2027 if the Strait of Hormuz remains closed due to regional conflict. The critical maritime chokepoint handles 20% of the world's oil and liquefied natural gas, and its closure would trigger an immediate shock to global energy supply chains.

According to EY UK Chief Economist Peter Arnold, while the British economy showed unexpected resilience early in 2026, a prolonged blockade of the strait would dismantle that stability. The consultancy projects UK economic growth will plummet to 0.5% this year, followed by a 0.2% contraction in 2027.

The blockade's impact on energy markets would be severe, with EY projecting sustained disruption could drive UK inflation back up to 6.4% by late 2026. This starkly contrasts with the Bank of England's baseline expectation of inflation peaking near 3.2% before settling toward the target rate.

The ripples of a Hormuz closure extend far beyond London, with East African nations facing dire economic consequences. Kenya's Energy and Petroleum Regulatory Authority relies heavily on stable international crude prices to dictate domestic pump costs, and an increase in Brent crude prices would lead to inflated fuel import costs through the Port of Mombasa.