UK Economy Faces Recession Risk Without Strait of Hormuz Reopening

Global accounting and consulting firm EY has warned that the UK economy may fall into recession in 2027 if the Strait of Hormuz remains closed until mid-2027. The strait is a critical route for global energy markets, with roughly one-fifth of the world's oil supply passing through it.

According to EY's forecasts, an extended disruption to the strait would drive up inflation and weaken economic growth in the UK. In their worst-case scenario, where the strait remains closed until early or mid-2027, the UK economy is expected to grow by just 0.5% in 2026 before shrinking by 0.2% in 2027.

However, if the Strait of Hormuz reopens by September 2026, EY forecasts a more positive outcome for the UK economy. In this scenario, economic growth would increase from 0.8% to 0.9% in 2026 and expand by 1.2% in 2027.

According to Peter Arnold, EY's UK Chief Economist, the economic outlook depends heavily on when shipping through the Strait of Hormuz returns to normal. 'If the Strait of Hormuz reopens in the coming months, we expect the UK to avoid a more pronounced downturn,' he said.