Up to 250,000 people could lose their jobs by mid-2027 as the UK economy 'flirts with recession', according to analysis from the EY Item Club. The warning comes after business confidence was shattered by the US-Israel conflict with Iran, which has sent energy prices soaring and disrupted global supply chains.
The EY Item Club forecasts the UK economy will flatline in the second and third quarters of this year, leaving it at risk of a technical recession. Growth is expected to halve from 1.4% in 2025 to 0.7% this year, while unemployment could rise from 5.2% to 5.8%, adding nearly 250,000 to the jobless total.
Chancellor Rachel Reeves has summoned bank chiefs for talks to contain the fallout. A separate report from Deloitte found that finance bosses at major UK firms are already cutting spending plans, with confidence among chief financial officers slumping to its lowest since the start of the Covid-19 pandemic.
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. Consumers' spending power will be squeezed, while more expensive financing and a less certain global backdrop will pour cold water on companies' investment plans.'
The Deloitte survey showed that 61% of CFOs cited energy costs and inflation as top concerns, while 60% flagged cyber-attacks. Ian Stewart, chief economist at Deloitte UK, noted: 'Rarely in the last 16 years have UK CFOs been more focused on cost control than today.'
