![\"Iran](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/04\/108290360-17760807231776080720-45232868315-1080pnbcnews.jpg\")
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The U.K. will suffer the biggest hit to growth of all the world’s richest economies because of the Iran war, the International Monetary Fund warned on Tuesday.<\/p>\n
In its latest World Economic Outlook, the IMF projected that the U.K. economy will now grow by just 0.8% in 2026, down from 2025’s 1.3% projection.<\/p>\n
That’s the largest cut to growth of any G7 economy, with the U.K. set to lag the U.S., which is projected to grow 2.3% in 2026,\u00a0as well as the euro area (1.1%), Spain (2.1%), France (0.9%). <\/p>\n
The IMF said the global economy now faces a major test as a result of the ongoing war in the Middle East, having weathered the trade and tariff upheaval last year. It warned that a protracted conflict could further worsen the outlook, while growing public debt and eroding institutions’ credibility risks further damage.<\/p>\n
‘A significant downgrade’<\/p>\n Global growth is now likely to be around 3.1% this year \u2014 a “significant downgrade” from 3.4% in 2025, said Pierre-Olivier Gourinchas, the IMF’s chief economist. Inflation, meanwhile, is forecast to rise to 4.4%, a sharp departure from earlier expectations.<\/p>\n Speaking with CNBC’s Karen Tso at the 2026 IMF-World Bank’s spring meeting in Washington, D.C. on Tuesday, Gourinchas said the U.S.-Iran war has halted the global economy’s momentum, and there is little central banks can do about the supply shock stemming from the war, given that oil prices are set in the Gulf region.<\/p>\n “Raising interest rates or cutting them is not going to change that fact,” Gourinchas said. “So, to some extent, they can see it through, but only as long as inflation expectations remain well-anchored and there is no wage-price spiral that takes over.”<\/p>\n However, any risk that inflation becomes more persistent would mean that central banks would have to step in “and step in decisively.”<\/p>\n The IMF report indicated that worsening geopolitical fragmentation, a reassessment of expectations surrounding AI\u2011driven productivity, or renewed trade tensions could further dent growth and destabilize markets.<\/p>\n “Fostering adaptability, maintaining credible policy frameworks, and reinforcing international cooperation are essential to navigating the current shock while preparing for future disruptions in an increasingly uncertain global environment,” it noted.<\/p>\n![\"IMF's](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/04\/108291138-17761785021776178499-45258906321-1080pnbcnews.jpg\")
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