“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, forecasts indicate that a quarter of a million people could lose their jobs by the middle of 2027. This alarming prediction comes as the UK economy is expected to flatline in both the second and third quarters of 2026.
Unemployment is projected to rise to 5.8% by mid-2027, up from the current rate of 5.2%. This shift reflects growing concerns about economic stability.
Growth is set to halve, dropping from 1.4% in 2025 to just 0.7% in 2026. The International Monetary Fund (IMF) has warned that the UK faces the largest growth downgrade among G7 nations.
CFOs have reported that geopolitical developments are now their greatest external risk. Confidence among chief financial officers plummeted to a net -57% between March 16 and March 30, 2026.
But it’s not just corporate leaders who are feeling the strain. “Consumers’ spending power will be squeezed,” Swannell added, “while more expensive financing arrangements and a less certain global economic backdrop will pour cold water on companies’ investment plans.”
Inflation is also expected to rise—projected to reach almost 4% in the second half of 2026. This adds further pressure on households and businesses alike.
Ian Stewart noted, “Rarely in the last 16 years have UK CFOs been more focused on cost control than today.” The immediate priority for finance leaders is clear: strengthen balance sheets amid these daunting external headwinds.
The ongoing conflict in Iran has exacerbated these challenges, impacting business confidence and economic forecasts across the board.
Details remain unconfirmed as analysts continue to monitor these developments closely. The next few months will be critical for assessing the full impact on the UK economy.
