Up to 250,000 people could lose their jobs by mid-2027 as the UK economy flatlines and risks falling into recession, according to analysis from the EY Item Club. The forecast, published alongside a separate Deloitte survey of chief financial officers, underscores the scale of the economic threat posed by the US-Israel conflict with Iran.
The EY Item Club expects the UK economy to stagnate in the second and third quarters of this year, leaving it vulnerable to a technical recession. Growth is projected to halve from 1.4% in 2025 to 0.7% in 2026, while unemployment is forecast to rise from 5.2% to 5.8%, adding nearly 250,000 to the jobless total.
Matt Swannell, chief economic adviser at the EY Item Club, said: 'Spiralling energy costs and disruption to supply chains will push the UK to the brink of a technical recession in the middle of this year. Consumers’ spending power will be squeezed, while more expensive financing arrangements and a less certain global economic backdrop will pour cold water on companies’ investment plans.'
The Deloitte survey found that CFO confidence had slumped to a net -57%, the lowest since the start of the Covid-19 pandemic. Finance chiefs cited geopolitical developments as the greatest external risk, with energy costs, inflation, and cyber-attacks topping their concerns. Many are shifting to defensive strategies, prioritising cost control and cash conservation over hiring and capital spending.
Chancellor Rachel Reeves has summoned bank chiefs for talks aimed at containing the fallout. The International Monetary Fund last week downgraded its UK growth forecast for 2026 to 0.8%, the largest cut among G7 nations.
