UK Economy Faces Grim Forecast Amid Strait of Hormuz Disruption

The UK economy may experience slow growth next year if disruption to the Strait of Hormuz linked to the Iran war continues. Treasury officials have briefed the Prime Minister on internal modelling that suggests UK GDP could see a mere 0.3% growth in 2027, according to Government sources.

This forecast is tied to an extreme scenario where the conflict persists until the end of 2026. The disruption has driven up energy prices since February and dampened consumer sentiment.

Meanwhile, modelling shown to the Prime Minister and Chancellor suggests the UK economy could grow by 0.9% this year if there's no permanent peace deal between the US-Israeli forces and Iran.