UK Sees 0.3% GDP Growth in 2027 as Hormuz Disruption Lingers
Updated
Updated · bbc.co.uk · Aug 12
UK Sees 0.3% GDP Growth in 2027 as Hormuz Disruption Lingers
1 articles · Updated · bbc.co.uk · Aug 12
Summary
Treasury modelling shown to Prime Minister Andy Burnham and Chancellor John Healey projects UK GDP growth of just 0.3% in 2027 under a reasonable worst-case Iran war scenario.
The forecast assumes the Strait of Hormuz stays effectively closed for five more months and no permanent US-Iran peace deal is reached before 2027, driving up oil costs and disrupting supply chains.
Under the same scenario, UK growth in 2026 would slow to 0.9% from the Office for Budget Responsibility's 1.1% March forecast, while 2027 would undershoot the OBR's 1.6% projection by a wide margin.
Inflation would peak at 4.3% in the first quarter of next year, up from 2.6% now and further above the Bank of England's 2% target.
The warning comes as the UK economy's early-year momentum has faded and economists expect official data on Thursday to show 0.4% growth for April through June.