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

The UK economy faces a recession if the Strait of Hormuz remains closed until mid-2027, warns global accounting firm EY. The company's UK Chief Economist, Peter Arnold, notes that economic growth and inflation will be affected by an extended disruption to this critical oil shipping route.

EY forecasts that under its worst-case scenario, where the Strait of Hormuz stays closed until early or mid-2027, the UK economy would grow by just 0.5% in 2026 before shrinking by 0.2% in 2027. However, if the strait reopens by September 2026, EY predicts a more positive outcome: the UK economy would expand by 1.2% in 2027.

The Strait of Hormuz is a vital route for global energy markets, carrying about one-fifth of the world's oil supply. Any prolonged disruption could lead to significant consequences for fuel prices and economic growth across Europe and beyond.