“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,” said Matt Swannell.
As of early Tuesday, experts warn that up to 250,000 people could lose their jobs by mid-2027. The UK economy is expected to flatline in the second and third quarters of 2026, risking a technical recession.
The EY Item Club predicts that unemployment will rise to 5.8%, up from the current 5.2%. This shift reflects broader economic challenges exacerbated by ongoing global tensions.
Growth is projected to halve from 1.4%% in 2025 to just 0.7%% in 2026. The International Monetary Fund (IMF) has warned that the UK faces the steepest growth downgrade among G7 countries.
“Consumers’ spending power will be squeezed,” Swannell added. “More expensive financing arrangements and a less certain global economic backdrop will pour cold water on companies’ investment plans.”
Confidence among chief financial officers has slumped dramatically—falling to a net -57% between March 16 and 30, 2026. CFOs are increasingly focused on cost control amidst these uncertainties.
Ian Stewart stated, “Rarely in the last 16 years have UK CFOs been more focused on cost control than today.” This shift indicates a significant concern for businesses navigating turbulent economic waters.
The situation remains fluid as inflation is expected to rise to almost 4%% in the second half of 2026. Details remain unconfirmed regarding how these projections will impact everyday consumers.
The immediate priority for finance leaders is clear: strengthen balance sheets against external headwinds. The focus now shifts to how businesses will adapt to these challenging conditions.
The ongoing conflict in Iran continues to impact business confidence and economic forecasts in the UK. As these developments unfold, further updates are anticipated.
This precarious situation underscores the urgent need for strategic planning among businesses and policymakers alike.