UK to ‘flirt’ with recession as Iran war oil shock bites, report warns

The UK economy will “flirt” with recession this year and almost 250,000 people could lose their jobs due to the effects of the Iran war oil price shock, according to a respected independent forecaster.

The Item Club, which uses Treasury economic modelling to produce its figures, released its latest report against a backdrop of further shifts in global oil costs due to events in the Middle East.

UK to ‘flirt’ with recession amid Iran oil shock and inflation

Spiralling energy costs amid the Middle East oil shock and the associated disruption to supply chains will push the UK to the brink of a technical recession in the middle of this year, according to new forecasts.

The UK is expected to “flirt” with recession, with no growth in the second or third quarters, leading GDP growth to slow to 0.7 per cent in 2026, down from 1.4 per cent last year, the Item Club has forecast. Growth is expected to be at a “still-below-par” 0.9 per cent next year.

Unemployment to peak at 5.8 per cent as jobs market faces ‘biggest hit’ since pandemic

Britain is set to be “pushed to the brink of a technical recession” in the coming year as the economic fallout of the war in Iran dampens growth prospects and sends unemployment soaring.

The latest Item Club report sees the UK economy flatlining in the second and third quarters as it digests the consequences of the conflict in the Middle East. This is forecast to tee the UK up for 0.7 per cent growth in 2026 – a mere half of the 1.4 per cent notched the previous year.

UK to ‘flirt’ with recession and 250,000 to lose jobs amid Iran war fallout, warn forecasters

Britain’s economy is poised to “flirt” with recession, with unemployment set to soar amid the fallout from the ongoing conflict in Iran, economic forecasters have warned.

Gentle descent of interest rates hit by explosive turbulence

Andrew Bailey had it all under control, until the US and Israel bombed Iran. Now spiralling energy prices leave the Bank of England facing hard decisions

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