The International Monetary Fund (IMF) has warned that a global recession is coming, thanks to the war with Iran. Any further escalation would trigger a global recession that would harm the United Kingdom far more than any other G7 country.
In its half-yearly update, the IMF said the UK would suffer the sharpest growth downgrade and the joint highest inflation rate in the G7 this year, even if the fallout from soaring energy costs can be contained by the middle of 2026, according to a report by The Guardian.
The IMF added that if a worst-case “severe scenario” unfolds, involving a drawn-out war and persistently higher energy prices, it said the world would face “a close call for a global recession” for only the fifth time since 1980.
The IMF chief economist, Pierre-Olivier Gourinchas, warned that the continuation of the war meant the world was moving closer to an “adverse scenario” in which oil prices would remain close to $100 this year before falling back to $75 in 2027.
“Of course, every day that passes, and every day we have more disruption in energy markets, we are drifting more towards the adverse scenario,” Gourinchas said.
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“The war in Iran is not our war, but it will come at a cost to the UK. These are not costs I wanted, but they are costs we will have to respond to,” said UK Chancellor Rachel Reeves in a rebuke of United States ruler Donald Trump and his war-mongering policies.
“To start a conflict without being clear what the objectives are and not being clear about how you are going to get out of it, I do think that is a folly. I feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve,” Reeves added.