The United Kingdom could experience the biggest economic growth hit of all the world’s richest countries if the Iran war continues to escalate.
In its latest World Economic Outlook, the International Monetary Fund predicted that the UK economy would grow by just 0.8% in 2026, down from 2025’s 1.3% projection.
The IMF also warned that inflation for the UK could climb to almost 4%, which is double the government’s 2% target.
This is the largest growth of any G7 economy as the UK is set to lag the U.S., which is projected to grow 2.3% in 2026.
It also lags behind the 1.1% projected for the euro area, the 2.1% projected for Spain and 0.9% projected for France.
If the war continues to send energy costs soaring due to the continuation of the war, the IMF said the world would face “a close call for a global recession” for only the fifth time since 1980.
After the IMF’S warning, UK Chancellor Rachel Reeves blamed U.S. President Donald Trump, who started the war, for the impact it's having on “families here in the UK but also families in the US and around the world”.
“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,” Reeves said.
Despite warning of slower growth for rich countries, the IMF said net energy importers and developing nations would face the biggest hit.



