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UK faces biggest hit to growth from Iran war of major economies, IMF sayspublished at 11:17 BST

11:17 BST

Faisal Islam
Economics editor

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.

In its latest World Economic Outlook, the IMF cut its estimate for UK growth this year to 0.8%, from the 1.3% prediction made in January before hostilities began.

The Fund said the downgrade was due to the war, fewer interest rate cuts, and the expectation that the impact of higher energy prices would linger into next year.

It also warned the war threatened to throw the world economy “off course” and a prolonged conflict risked a global recession. The IMF urged central banks to be cautious over raising interest rates to counter higher inflation.

The UK’s downgrade of half a percentage point is the largest of the world’s advanced economies, with the UK now earmarked to have middling growth this year compared to its peers.