UK Economy Forecast Shows Slight Growth Despite Conflict Risks
The UK economy has shown resilience despite disruptions from the Middle East conflict and is now forecast to grow at a slightly faster pace in 2026, according to EY's new UK Economic Outlook.
EY expects GDP growth of 0.9% in 2026, up from 0.8% previously predicted in May. Growth is then projected to rise to 1.2% in 2027, matching the previous forecast.
The UK economy performed better than expected in the second quarter of 2026 due to oil prices returning to pre-conflict levels more quickly than anticipated, preventing a significant increase in inflation.
However, recent conflict escalation and disruptions in the Strait of Hormuz are projected to weigh on growth by year's end. A prolonged closure could cause the UK economy to contract next year.