The E&Y auditing institute warned that if the Strait of Hormuz does not reopen to shipping by mid-next year, the UK economy will shrink in 2027.

Peter Arnold, E&Y’s chief economist in the UK, said that reopening the strait in the coming months would prevent a deeper slump, but that its continued closure until 2027 would raise inflation and could push the economy into contraction.

Based on the institute’s forecast, in a scenario where the strait remains closed until early or mid-2027, this year’s growth would fall to half a percent, and inflation would also reach 6.4 percent by the end of 2026.