EY has warned that the UK economy could tip into recession next year if the strait of Hormuz remains closed, as the conflict-hit waterway continues to disrupt global energy markets. The consultancy's latest outlook says GDP growth could slow sharply to 0.5% this year and contract by 0.2% in 2027 if the closure persists into early or mid-2027, since roughly a fifth of the world's oil and gas normally passes through the strait.

If the strait reopens by the end of the third quarter of 2026, EY's base case sees growth holding up at 0.9% this year and 1.2% in 2027, an upgrade from its earlier 0.8% estimate. EY UK chief economist Peter Arnold said ongoing energy disruption would test the economy's resilience, with technology and business services likely to remain key growth drivers while construction faces continued pressure from rising costs, labour shortages and weak productivity. The warning came as Brent crude fell about 5% to $83.49 a barrel after Donald Trump said he had cancelled planned US military strikes on Iran pending a "rapid" nuclear deal and full reopening of the strait.