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

A new report from EY warns that the UK economy could be sent into recession next year if the Strait of Hormuz remains closed into 2027.

The Strait, which is a vital waterway through which a fifth of the world's oil and gas is normally carried, has been affected by the Middle East conflict.

EY's base case forecast suggests that if the Strait reopens by the end of the third quarter this year, growth will remain fairly resilient, with gross domestic product (GDP) expected to grow by 0.9% in 2026 and 1.2% in 2027.

However, if the Strait remains closed into 2027, GDP could contract by 0.2% next year, and inflation could soar to 6.4% by the end of 2026 due to surging oil and energy prices.