New Prime Minister Andy Burnham has been briefed on internal Treasury modelling indicating that UK GDP growth could be as low as 0.3% in 2027. This projection is based on a scenario where disruption in the Strait of Hormuz continues until the end of 2026.
Treasury sources confirmed this modelling, which was also presented to the Chancellor. Government officials stated that planning for all possible scenarios is a routine practice.
The UK economy experienced a strong start to the year, but growth subsequently faltered. The conflict in the Middle East, referred to as the Iran war, has reportedly pushed up oil and fuel prices and disrupted supply chains, affecting some businesses.
Official figures detailing the economy's growth between April and June of this year are expected to be released on Thursday. Economists are anticipating a growth of 0.4% for that three-month period.