Financial consultancy EY has slightly upgraded its economic growth forecast for the UK in 2026 to 0.9%, up from its previous estimate of 0.8%. According to its latest UK Economic Outlook, the modest revision reflects a better-than-expected performance during the second quarter, aided by temporary stabilization in global crude oil prices.
However, EY issued a stark warning regarding ongoing geopolitical disruptions in global energy trade routes. If shipping through key transit bottlenecks remains restricted into early 2027, elevated fuel costs could drive UK inflation up to 6.4% and push the national economy into contraction next year.
The forecaster expects the Bank of England to maintain interest rates at 3.75% for the remainder of 2026 to contain persistent cost pressures. EY UK Chief Economist Peter Arnold noted that while high-value technology and business services continue to underpin national output, persistent inflation and rising project costs threaten momentum in major infrastructure projects.
