RSM has cut its GDP forecast for 2026 to 1.7%, reflecting heightened economic uncertainty following recent geopolitical tensions. The firm now estimates a 30% probability of a recession within the next year, up from 20% prior to the conflict in Iran. This adjustment underscores the growing risks to economic stability, particularly in light of inflationary pressures and potential monetary policy shifts.

The situation in Iran has significant implications for global markets, particularly in energy. A ceasefire could alleviate sharp energy price increases, which may help temper inflation and reduce the urgency for interest rate hikes. However, analysts caution that the UK may still face stagflation, complicating the economic outlook and influencing investor sentiment across sectors.

Market professionals should closely monitor these developments, as the interplay between geopolitical events and economic indicators will be crucial in shaping investment strategies and risk assessments in the coming months.

Source: realeconomy.rsmus.com