Quarter of a million people could lose job by middle of 2027 as UK ‘flirts with recession’, analysis says
A quarter of a million people could lose their jobs by the middle of next year as Britain “flirts with recession”, analysis suggests, after business confidence was shattered by the US-Israel war on Iran.As the chancellor, Rachel Reeves, summoned bank chiefs for talks aimed at containing the fallout, twin reports from top accounting firms underlined the scale of the economic threat facing the UK.Iran’s retaliatory closure of the strait of Hormuz trade route and its strikes on its regional neighbours, which have sent oil and gas prices soaring, will cause the biggest economic hit since the Covid pandemic, according to the EY Item Club, an economic forecast group.A separate report by Deloitte found finance bosses at big UK businesses were already reining in their spending plans, taking action that was likely to weigh on economic activity and hiring.The EY Item Club said it expected the UK economy to flatline in the second and third quarters of this year, leaving the country at risk of recession, defined as two successive quarters of contraction.
Growth is projected to halve from 1.4% in 2025 to 0.7% this year, choking off the gathering momentum that had been reflected in February’s better-than-expected rise in gross domestic product.The EY Item Club also expects unemployment to hit 5.8% by the middle of 2027, up from the current five-year high of 5.
2%, with almost 250,000 more people losing their jobs because of the crisis in the Middle East.If the forecast is correct, that would increase the number of jobseekers from 1.87 million now to more than 2.1 million.Matt Swannell, the forecast group’s chief economic adviser, said: “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.
“Consumers’ spending power will be squeezed, while more expensive financing arrangements and a less certain global economic backdrop will pour cold water on companies’ investment plans.”Last week a report from the International Monetary Fund showed the UK faced the biggest growth downgrade among the G7 group of countries, with 0.8% forecast for 2026, down from the 1.3% the IMF predicted in January.The Item Club expected inflation to rise to almost 4% in the second half of 2026 – nearly double the Bank of England’s 2% target – but also predicted policymakers on the Bank of England’s monetary policy committee would hold off from kneejerk increases in interest rates.
Executives in charge of the purse strings of British businesses are already more pessimistic than at any time since the start of the Covid-19 pandemic, according to a separate report from Deloitte.Confidence among chief financial officers slumped to a net -57% between 16 and 30 March, down from -13% in the previous quarter, according to its CFO survey.CFOs reported that geopolitical developments represented the greatest external risk to their businesses.“Finance leaders are coping with high levels of external uncertainty and their focus is on managing risks from geopolitics, rising energy prices and higher financing costs,” said Ian Stewart, the chief economist at Deloitte UK.When asked about the consequences of adverse geopolitical developments over the next three years, the top three concerns among CFOs were energy costs (61%), inflation and interest rates (61%) and an increase in cyber-attacks (60%).
The Iran crisis has had an immediate impact on energy costs, potentially feeding through into inflation and interest rates.The US has also reported an increase in Iran-affiliated cyber-attacks on critical American infrastructure.CFOs have reacted to rising risk with a shift to more defensive financial strategies, signalling lower spending plans that support EY’s assumptions about a slowdown in wider economic growth.Cost control and building up cash are at the top of the priority list, while expectations for capital spending and hiring have flagged.“Rarely in the last 16 years have UK CFOs been more focused on cost control than today,” Stewart said.
“This challenging environment is prompting CFOs to scale back expectations for margins and sharpen their focus on cost reduction and cash conservation.The immediate priority for finance leaders is to strengthen balance sheets in the face of external headwinds.”
Finance leaders warn over Mythos as UK banks prepare to use powerful Anthropic AI tool
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Liz Kendall urges UK public to embrace AI as government makes first £500m fund investment
The UK technology secretary has urged the country to “make AI work for Britain”, brushing off fears about its impact on jobs and cybersecurity as the government announced its first investment under a £500m sovereign AI fund. Liz Kendall said the UK had to “seize” the opportunity offered by AI despite concerns underlined this month when US startup Anthropic revealed it had developed an AI model that posed a potentially significant cyber threat. Asked how the government makes the case for embracing a technology that could disrupt jobs and now cybersecurity, Kendall said: “We have to seize this to make it work, for Britain, for our jobs, for solving the biggest challenges we face as a world.”Speaking on Thursday as the government unveiled its first investment in a UK company as part of a £500m sovereign AI fund, Kendall acknowledged “people are worried about the risks and what it means for their jobs”, but AI entrepreneurs also believed they can “make it work … they can create jobs”.In January Kendall admitted “some jobs will go” as AI automates certain tasks and roles, but it would also create new employment opportunities
‘How do I end a call?’: the elderly Japanese people determined to master smartphones
It’s not only young people whose gaze is fixed on tiny screens. But for these users in Tokyo, clicking and scrolling is anything but second nature.“I can’t deal with all of the apps that jump out at me,” says one. “How do I know if I’ve definitely ended a call?” asks another.They are common concerns among the four women and one man attending a beginner’s smartphone class at a public facility for older residents in Nerima in the Japanese capital’s north-west suburbs
Labour and Lib Dem MPs demand ‘shameful’ Palantir NHS contract be scrapped
MPs have queued up to demand the government scraps its £330m NHS contract with the spy-tech company Palantir, calling it “dreadful” and “shameful” in a debate on Thursday, after which the government said it was “no fan” of the US company’s politics.Labour and Liberal Democrat MPs led the calls for Palantir, which also works for Donald Trump’s ICE immigration crackdown and the Israeli military, to be removed as a supplier to the NHS federated data platform (FDP), with one Labour backbencher, Samantha Niblett, questioning whether it could be “trusted as a custodian of the intimate health records of tens of millions of British citizens”.The Lib Dem MP Luke Taylor, who called the deal “shameful”, said: “Palantir and Peter Thiel must have their hands ripped off of our NHS before it is too late.”Thiel, a Trump-supporting tech billionaire, founded the company and has previously said that democracy and freedom are incompatible.In response to the MPs who spoke in a Westminster Hall debate, the government confirmed it would consider whether to continue with the deal when a break clause is due in spring 2027, although £210m of the £330m has already been spent
Man used AI to make false statements to shut down London nightclub, police say
A businessman has pleaded guilty to making false statements in order to shut down a nightclub, which police believe were generated using AI.A Metropolitan police source said the use of AI to generate letters by complainants who do not exist is a growing issue.Aldo d’Aponte, 47, the CEO of Arbitrage Group Properties, pleaded guilty to writing two letters, supposedly by his neighbours, objecting to the reopening of Heaven nightclub, which temporarily closed after a rape allegation against one of its security guards.D’Aponte was given a 12-month conditional discharge and ordered to pay £85 costs and a £26 victim surcharge.Heaven, an LGBTQ nightclub in central London had its licence suspended in November 2024 after a 19-year-old woman accused a bouncer of rape
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