Ernst & Young has warned that the UK economy could enter recession in 2027 if the strategically important Strait of Hormuz is not reopened by the middle of next year. The forecast, reported by Al Jazeera and published on August 3, 2026, says a prolonged closure would raise inflation and increase pressure on the British economy.

Peter Arnold, EY’s UK chief economist, said the country could avoid a major economic downturn if the strait reopens within the next few months. However, he said an extended closure lasting into 2027 would drive inflation higher and could push the economy towards contraction or recession next year.

EY estimates that if the strait remains closed until the beginning or middle of 2027, UK growth this year could fall to 0.5 percent, followed by a 0.2 percent economic contraction in 2027. Under a more positive scenario in which the route reopens by September, EY forecasts 0.9 percent growth this year, up from its earlier 0.8 percent estimate, and 1.2 percent expansion in 2027.