{"id":1377,"date":"2026-03-30T19:07:13","date_gmt":"2026-03-30T19:07:13","guid":{"rendered":"https:\/\/www.europesays.com\/britain\/1377\/"},"modified":"2026-03-30T19:07:13","modified_gmt":"2026-03-30T19:07:13","slug":"uk-especially-exposed-to-2022-style-gas-shock-imf-warns-as-gilts-head-for-worst-month-since-truss","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/britain\/1377\/","title":{"rendered":"UK ‘especially exposed’ to 2022 style gas shock, IMF warns – as gilts head for worst month since Truss"},"content":{"rendered":"

By JOHN-PAUL FORD ROJAS, DEPUTY BUSINESS EDITOR<\/a> <\/p>\n

Updated: 13:26 EDT, 30 March 2026 <\/p>\n

The International Monetary Fund (IMF) has warned that Britain\u2019s economy is especially exposed to an energy shock similar to that experienced in 2022 as turmoil in the Middle East deepens.<\/p>\n

As oil prices surged again, the IMF said in a blog post that in Europe the impact of the Iran war was \u2018reviving the spectre of the 2021-22 gas crisis\u2019.<\/p>\n

That was when the build up to and mobilisation of Russia\u2019s full-scale invasion of Ukraine drove a previous surge in gas and oil prices, pushing UK inflation<\/a> into double digits.<\/p>\n

The IMF said: \u2018The war in the Middle East is upending lives and livelihoods in the region and beyond.<\/p>\n

\u2018It is also dimming the outlook for many economies that only just shown signs of a sustained recovery from previous crises.\u2019<\/p>\n

And it added that \u2018countries such as Italy and the United Kingdom are especially exposed by their reliance on gas-fired power\u2019.<\/p>\n

\"The <\/p>\n

The surge in borrowing costs creates a headache for Rachel Reeves<\/p>\n

The warning came as UK borrowing costs were on course for their biggest monthly increase since Liz Truss\u2019s disastrous mini-Budget sparked a major sell-off, also in 2022.<\/p>\n

Yields on UK ten-year bonds, which rise as prices fall, have climbed by 16pc so far this month as the US-Israel war on Iran causes market mayhem.<\/p>\n

Bonds \u2013 small parcels of debt issued by governments or companies to raise cash \u2013 have been caught up in the sell off.<\/p>\n

Investors fear that the surge in oil and gas prices due to the war will drive up inflation, forcing central banks to raise interest rates<\/a> rather than cutting them.<\/p>\n

Britain \u2013 which already has the highest borrowing costs in the G7 group of advanced economies \u2013 has been worse hit than some others.<\/p>\n

It already has the highest inflation in the G7 and investors also fear it could embark on a borrowing splurge to protect households from surging energy bills.<\/p>\n

On Monday, there was little sign of respite as oil prices surged again, with Brent crude climbing to nearly $117 a barrel.<\/p>\n

However, UK borrowing costs did edge lower, to around 4.9pc, having topped 5.1pc last week as they hit the highest level since 2008.<\/p>\n

The increase in bond yields poses a major headache for Chancellor Rachel Reeves, knocking billions off her \u00a323.6bn \u2018headroom\u2019 against meeting tax-and-spend rules.<\/p>\n

Howard Davies, former chairman of NatWest, told the BBC: \u2018The overall position of the UK \u2013 the financial markets are telling us \u2013 is not good.<\/p>\n

\u2018Confidence in our borrowing has gone down and the costs of our borrowing have gone up, because people are concerned about our public finances.<\/p>\n

\u2018The increase in interest rates that has happened for us means about \u00a312bn a year of additional interest payments.\u2019<\/p>\n

That is \u2018eating up a lot\u2019 of the headroom, Davies said, and \u2018any suggestion that the government\u2019s prepared to take the brakes off and splurge on public spending may result in even further increase in interest rates\u2026 so you\u2019ve got to be very careful here\u2019.<\/p>\n

Elsewhere, US bond yields are up this month by a chunky 10pc, and Germany\u2019s by 15pc. Japanese ten-year bonds are up by 11pc and Canada\u2019s have risen 12pc.<\/p>\n

The sell-offs have been even more pronounced in France, where yields are up 17pc, and in Italy, where they have surged by 22pc.<\/p>\n

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