A new report has predicted that the UK\u2019s economy will flatline across the second and third quarters of this year, hovering on the brink of a technical recession \u2013 defined as two consecutive quarters of falling GDP<\/a>.<\/p>\n The latest Independent Treasury Economic Model (Item) Club report predicted a modest 0.7 per cent rise in gross domestic product (GDP) over the entire year, a significant downgrade from the 1.4 per cent expansion initially forecast for 2025. <\/p>\n It comes just days after the International Monetary Fund (IMF<\/a>) warned that Donald Trump<\/a>\u2019s war on Iran<\/a> risks triggering a global recession in a damning assessment of the conflict\u2019s impact<\/a> on the world economy.<\/p>\n While the economy will \u201cflirt with recession\u201d, it will also see higher oil and energy prices<\/a> weigh on activity, and the jobs market suffer its \u201cbiggest hit since the pandemic\u201d, the Item Club warned.<\/p>\n It anticipates the UK\u2019s jobless rate will peak at 5.8 per cent by mid-2027, resulting in nearly 250,000 more people out of work \u2013 meaning there would be more than 2 million jobseekers.<\/p>\n Matt Swannell, chief economic adviser to the UK-based economic forecasting group, said: \u201cSpiralling energy costs and disruption to supply chains will push the UK to the brink of a technical recession in the middle of this year. <\/p>\n \u201cConsumers\u2019 spending power will be squeezed, while more expensive financing arrangements and a less certain global economic backdrop will pour cold water on companies\u2019 investment plans.\u201d<\/p>\n US president Donald Trump has issued further threats to Iran<\/a> if a deal is not reached around the Strait of Hormuz, after it was reported that Iranian forces were refusing passage through the key trading route over the weekend.<\/p>\n The IMF has said the international outlook had \u201cabruptly darkened\u201d as a result of the war, which threatens to throw the global economy \u201coff course\u201d and could cause an energy crisis on an unprecedented scale.<\/p>\n Last week, it highlighted the UK as facing the largest growth downgrade among G7 nations, with a forecast of 0.8 per cent for 2026, sharply down from 1.3 per cent predicted in January. <\/p>\n However, recent data indicated stronger than expected economic momentum before the full impact of the Iran conflict, with GDP growing by 0.5 per cent month on month in February \u2013 the fastest expansion since January 2024.<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2026\/04\/2026-04-15T063129Z_1964057371_RC28G2AAAIT1_RTRMADP_3_ROBERT-WALTERS-OUTLOOK.jpg\")
The Item Club said higher oil and energy prices will stifle activity, and the jobs market will endure its \u2018biggest hit since the pandemic\u2019 (Reuters)<\/p>\n![\"In](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2026\/04\/71f19079cf2783103f422c1dd5f6e4e8Y29udGVudHNlYXJjaGFwaSwxNzc2Njc4MzA5-2.84300690.jpg\")
In a further blow to Keir Starmer, the IMF has said the international outlook had \u2018abruptly darkened\u2019 as a result of the war (PA)<\/p>\n