UK Economy Faces 0.2% Contraction if Strait of Hormuz Remains Closed

Britain's economy is facing a significant downturn if the Strait of Hormuz remains closed to shipping, according to forecasters at accountants EY. The company warns that an extended closure into 2027 would raise inflation and could push the economy into contraction next year.

EY slightly nudged up its growth forecast for this year to 0.8% from 0.9%, based on the assumption that the Strait reopens by the end of September, with growth expected at 1.2% in 2027 if the Strait reopens soon.

However, if the Strait remains closed until mid-2027, UK growth this year will slow to 0.5%, and the economy will shrink by 0.2% in 2027, with inflation rising to 6.4% by the end of 2026.