Media: Iran war could push UK economy toward serious recession

Around 250,000 jobs in the United Kingdom could be lost by mid-next year amid worsening economic conditions driven by rising energy prices and the fallout from the conflict involving the United States, Israel, and Iran, according to The Guardian, citing analytical reports.

Experts say the country is “on the brink of recession,” as higher oil and gas prices following the escalation in the Middle East continue to increase pressure on businesses and consumers.

An EY Item Club report suggests that Iranian actions, including disruptions to shipping through the Strait of Hormuz, could trigger a severe economic shock comparable to the impact of the COVID-19 pandemic.

A separate Deloitte study highlights a sharp decline in business confidence, with companies shifting toward cost-cutting and reduced hiring.

Economists forecast that the UK economy could effectively stagnate in the second and third quarters of the year, increasing the risk of a technical recession. GDP growth is now projected at 0.7% this year, down from earlier estimates of 1.4%.

Unemployment is expected to rise to 5.8% by 2027, equivalent to roughly 250,000 additional job losses.

Inflation is also projected to accelerate to nearly 4% in the second half of 2026, significantly above the Bank of England’s 2% target.

According to Deloitte, its chief financial officer business confidence index has fallen to -57%, the worst level since the pandemic. Companies are responding mainly by cutting investment, building cash reserves, and scaling back hiring plans.

By Jeyhun Aghazada