UK Risks Recession and 250,000 Job Losses by 2027

Economic forecasters have warned that Britain faces the risk of recession and significant job losses due to the escalating Middle East conflict involving Iran, with up to 250,000 people potentially out of work by mid-2027. The crisis, triggered by US and Israeli strikes and Iran's retaliatory closure of the Strait of Hormuz, has driven up oil and gas prices, threatening to deliver the largest blow to the UK jobs market since the Covid-19 pandemic.

According to the EY Item Club, an independent economic forecasting group, the UK economy is expected to flatline in the second and third quarters of this year, placing it on the brink of a technical recession, defined as two consecutive quarters of shrinking gross domestic product. Overall GDP growth for 2026 is now projected at 0.7 percent, halved from the 1.4 percent anticipated for 2025. The report attributes the downturn to spiraling energy costs and disrupted supply chains, which are squeezing consumer spending and deterring business investment amid higher financing expenses and global uncertainty.

Unemployment is forecast to climb to 5.8 percent by the middle of 2027, up from the current five-year high of 5.2 percent, as...