Published: 11:34 AM, 14 April 2026
Iran War could have very deep impact on UK economy: Reports
The United Kingdom is facing the biggest hit to growth from the Iran war out of the G20 major economies, according to an influential global policy group, reports BBC.
Economic growth in the UK this year is forecast to be 0.7%, the Organization of Economic Co-operation and Development (OECD) said, down from its previous forecast of 1.2%. Inflation is also predicted to be higher than expected. The OECD has downgraded forecasts for many of the world's biggest economies due to the US-Israel war with Iran.
A prolonged conflict could trigger "significant energy shortages" globally, it warned, while if the sharp rise in fertilizer prices is sustained crop yields will be impacted and food prices will soar next year. The OECD's global growth forecast for this year is unchanged at 2.9%, but it predicts inflation across the G20 countries will be 4%, sharply up from its previous forecast of 2.8%.
UK inflation is now forecast to hit 4% this year, up from the previous estimate of 2.5%. The OECD then forecasts inflation will drop to 2.6% in 2027 - still up from its previous projection of 2.1%.
Among G7 countries, only the US is predicted to have higher inflation than the UK in the forecast, while only Italy is expected to see weaker growth.
In early March the UK government's official forecaster, the Office for Budget Responsibility (OBR), cut its expected growth rate for the UK this year to 1.1% from the 1.4% it predicted in last year's Budget. But this forecast was made before the Iran war, which the OBR said could have a "very significant" impact on economies.
Chancellor Rachel Reeves said the Iran war would affect the UK, but "in an uncertain world we have the right economic plan".
"The decisions we have taken have put us in a better position to protect the country's finances and family finances from global instability," she said.
But shadow chancellor Sir Mel Stride called the downgrade a "damning verdict on how vulnerable our economy is thanks to Labour".
"Rachel Reeves can blame the world all she wants, but it's her choices that have weakened our economy at the worst possible moment," he added.
