British industry and consumers could be in for a torrid time in the months ahead, with inflation going through the roof and interest rates spiking.
It was reported at the weekend that UK inflation could hit 15% this winter.
This alarming figure came in forecasts from the consultancy arm of EY, and it highlights the scale of the challenges facing businesses and households in the months ahead.
The worst-case scenario from economists at EY-Parthenon is based on the premise that President Putin blocks gas supplies to Europe, food prices soar and inflation expectations become entrenched among the population.
Inflation, which is now at a 40-year high after hitting 9.4% in June, is a key focus in the Tory leadership contest.
Rishi Sunak, who is battling with Liz Truss to become prime minister, declared at the weekend that the cost of living is the "number one challenge we face".
The former chancellor told the Times that Britain "should not be complacent" about inflation and contrasted his policies with those of Ms Truss, who he said risked embedding soaring prices in the economy with her proposed £30billion of tax cuts.
Interest rates could reach 7%
To counter the inflationary impact of those cuts, Patrick Minford, an economist associated with Ms Truss, has said interest rates will have to rise to 7%.
Rates currently stand at 1.25%, but could be lifted by the Bank of England to 1.75% on August 4.
Mr Sunak, who quit as part of the cabinet mutiny against Boris Johnson, has clashed repeatedly with Ms Truss over economic policy during the leadership campaign so far.
He topped the MPs' ballots to qualify for the final run-off with Ms Truss, but polls currently suggest the foreign secretary is the favoured candidate of party members, who decide the leader.
Hustings are taking place this month and next, and the two candidates will square off in a live BBC TV debate today, followed by another hosted by The Sun and TalkTV tomorrow.
Later this week, America's fight to tame rising prices will be in focus when the Federal Reserve is expected to raise interest rates by 0.75% - and possibly a full point - after inflation hit 9.1% in June.
US rates have already been raised three times this year - to a range of 1.5% to 1.75%.
Mats Persson, a partner at EY-Parthenon and a former Downing Street adviser, said that companies needed to think about cutting loss-making contracts and products, and about trying to be creative with pay deals - perhaps providing more perks or profit-related pay to keep key staff.