Burnham warned Iran war could hit UK growth next year
Treasury models 0.3% growth in 2027 and inflation peaking at 4.3% if energy disruption lasts, complicating the new government’s budget plans.
- Internal Treasury modeling warns that UK economic growth could barely increase next year if Strait of Hormuz disruption continues through 2026, according to assessments reviewed by Prime Minister Andy Burnham and Chancellor John Healey.
- Ongoing Middle East conflict and US-Iran tensions have disrupted supply chains and spiked energy prices since February, prompting officials to plan for this worst-case economic outcome.
- Projections indicate 0.9% growth for 2026 and 0.3% for 2027, falling sharply below the Office for Budget Responsibility's forecasts; CPI inflation could peak at 4.3% in early 2027, challenging Burnham's cost-of-living pledges.
- Healey must now balance Burnham's ambitions for increased public spending against the significant threat of a growth downgrade, complicating the upcoming October 28 budget for the new administration.
- While the UK economy showed resilience in early 2026, economists await official figures on Thursday that may reveal monthly GDP dipped 0.1% in June as construction activity faltered.
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Which economy would benefit the most from end of U.S.-Iran war?
Which country stands to benefit the most financially from an end of hostilities between the U.S. and Iran? NBC News' Keir Simmons answers that and more subscriber questions in his full Q/A available on NBCNews.com.
Internal UK Forecasts Raise Risk of Growth Downgrade Due to War
The UK economy will barely grow next year if the Strait of Hormuz stays badly disrupted until the end of 2026, according to internal Treasury modeling that complicates Andy Burnham’s premiership and the coming budget.
UK economy dealt fresh blow as growth could fall to just 0.3 per cent next year
Andy Burnham issued economy warning as UK growth could fall to just 0.3 per cent . Households could face another difficult year for their finances if disruption in the Middle East continues, with the UK economy at risk of barely growing in 2027
Evening Standard
UK economy ‘may grow by only 0.3% next year if Middle East disruption goes on’
Internal modelling from the Treasury suggests UK GDP could see growth as low as 0.3% in 2027.
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