As The Guardian notes this morning:
EY has kicked off the week with a warning that the UK could fall into recession next year if the strait of Hormuz remains closed.
The consultant's latest economic outlook has suggested that gross domestic product (GDP) could slow sharply to 0.5% this year and contract by 0.2% next year if the conflict is not resolved and the vital waterway – through which a fifth of the world's oil and gas is normally carried – remains shut until early or mid-2027.
EY is, of course, the accounting firm once known as Ernst & Young. They think themselves one of the masters of the universe, despite which it has taken this long to notice that war is disrupting oil supplies and is very likely to continue to do so.
What is more, they now realise this might have economic consequences and want to tell the world, and The Guardian is naive enough to think this is news when a few of us - me included - have been saying so for months now.
What has kept them blind to this to date?
Are they unobservant?
Or frightened of Trump?
Or frightened of reaction from their clients?
That's my exhaustive list of possibilities. Whichever is true, EY are not masters of anything.
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I worked for them for ten years in Audit and Tax. They are very good at that. They got into forecasting by sponsoring the Item club so they could charge their big clients fat fees (I’ve seen invoices) for giving them a financial “weather forecast”. Personally, I think they are wasting their money. The situation is simply too unpredictable, too much uncertainty.
What I think is strange is that no one seems to be mentioning China’s big role in the oil prices being kept a lot lower than many thought it would rise too. China have turned out to be secretly building up the worlds largest oil reserve. They have a years supply and have been actually cutting imports. The have more oil in reserve than the rest of the world combined. The second largest is the USA, who could hold out for just 90 days. This has greatly reduced the price shock that could have occurred. They obviously did it for their own self-interest and not to protect us from the stupidity of one orange man baby but it does seem odd no one seems to be mentioning this elephant in the room.
I have mentioned it.
I missed that you’d covered it but I could have guessed. I was referring to the mainstream media. I cannot believe that no one knows this, so that just leads me to conclude it doesn’t suit the narrative. None of the experts in the mainstream media seems to get questioned on why their predictions of a massive oil price spike haven’t materialised. It’s a really big story that hasn’t been given any coverage.
Aah, Ernst & Young! Happy memories. They did the original report on my old friends, crooked 121Media/Phorm, at the time of their covert unlawful DPI deal with BT. Ernst & Young gave it a clean bill of health, but their “due diligence”missed the fact that it fell foul of ICO and EU regulations on non-consensual interception of communications (among other things), so after scurrying round the world, finally went bust in 2016 having not made a penny in profit, but issued millions of dollars of overhyped dotcom shares.
https://static1.1.sqspcdn.com/static/f/84694/1382862/1204497817077/EY_Phorm.pdf
https://en.wikipedia.org/wiki/Phorm
The Ernst & Young report was IMHO, a superficial whitewash, and widely derided at the time by people who knew what they were talking about.
… and this once again brings to our attention the subject of GDP.
If you find yourself at a loose end (as if!). It would we interesting to hear your thoughts on this often quoted number, how it’s calculated, and how relevant the resulting value is.
I was listening to an interview with Professor Guy Standing the other day, and was surprised when he mentioned that Care Workers are not included.
There’s much that I hear, that makes me believe it’s an odd metric to use in economic reasoning
I always thought it was interesting that unpaid care, housework and volunteering are not included seeing as no money exchanges hands, but that illegally dealing drugs, or selling stolen property increase GDP seeing as they involve spending money somewhere (it may not be income taxed but criminals buy things and pay VAT either way). Correct me if I am wrong but this seems the easiest argument against using GDP as a measure since it has no way of discriminating between legal and illegal economic activities.
But it is likely to underestimate illicit activity, maybe heavily. All that middle class cocaine…
In my Yank opinion, Ernst & Young sees no end to the war or any type of conflict resolution detente in the near future.
This realization is also beginning to die-hard MAGAts in the face.
The 2026 November Midterm elections are going to be very interesting. If I was a betting person, I would invest in popcorn futures.
🙂