Iran War Forces IMF to Cut UK Growth Forecast, Hits UK Economy Hardest

The IMF downgraded the UK's growth forecast to 0.8%, the largest cut among the G7.

“The energy shock from the Iran war will hit the UK the hardest of the world's advanced economies, the International Monetary Fund (IMF) has forecast”

BBC

The downgrade was attributed primarily to the economic fallout from the Iran war.

BBC

The UK is forecast to have the joint highest inflation in the G7 at 3.2%.

Unemployment is expected to rise to 5.6% from 4.9% last year.

Chancellor Rachel Reeves acknowledged the war will come at a cost to the UK.

The shadow chancellor blamed Reeves for the size of the downgrade.

The IMF warned the Iran war could trigger the largest energy crisis in modern times.

The UK remains sensitive to rapid rises in energy prices.

CNBC

Cornwall Insight expects the typical energy bill to reach £1,861 in July.

The IMF cautioned central banks against raising interest rates too prematurely.

Untargeted fiscal support measures are frequently poorly designed and costly.

The IMF cut its global growth forecast to 3.1% for 2026.

A severe scenario could collapse global growth to about 2%.

Inflation would exceed 6% in such a scenario.

The global economy is threatened with being thrown off course by the war.

The IMF set out three possible scenarios for the war.

The Bank of England's Andrew Bailey and Chancellor Reeves were in Washington.

Chancellor Reeves said the war will come at a cost to the UK.

The shadow chancellor blamed Reeves for the size of the downgrade.

Khaama Press

Liberal Democrat Treasury spokesperson called the downgrade an indictment of Trump's idiotic war.

The IMF cautioned that the UK had much less room to move now.

Any support measures should stay within current government spending.