UK Economy on Shaky Ground as Energy Disruptions Loom Large

The UK economy is facing significant risks due to the prolonged disruption of global energy markets and the continued closure of the Strait of Hormuz.

According to a report by EY, if the waterway remains closed into early or mid-2027, the UK economy could contract by 0.2% in 2027, with weaker growth, rising prices, and lower business investment weighing heavily on the economy.

The consultancy expects inflation to reach 6.4% by the end of 2026 under this adverse scenario, as oil and gas prices rise. Consumer spending is forecast to increase by 0.3% in 2026 before improving to 0.9% in 2027.