![\"Rachel](\"https:\/\/www.europesays.com\/iran\/wp-content\/uploads\/2026\/03\/e59027a165b6dd426f29eb55997c3ed5.jpeg\")
Chancellor Rachel Reeves said the Iran conflict was \u2018not one that we started, not is it a war we have joined\u2019 (Yui Mok\/PA) \u00b7 Yui Mok <\/p>\nThe UK is set to face significantly weaker economic growth this year and surging inflation, with a prolonged war in the Middle East risking global energy shortages and higher food prices, new forecasts shows.<\/p>\n
The conflict has worsened the outlook for many of the world\u2019s largest economies, the Organisation of Economic Co-operation and Development (OECD) said.<\/p>\n
As well as oil and gas supply disruption caused by the Iran war, fertiliser shortages could send food prices soaring if the conflict is long-lasting, the OECD warned.<\/p>\n
In its interim economic outlook, the influential organisation said UK Consumer Prices Index inflation will be 1.5 percentage points higher this year than it had been forecasting a few months ago.<\/p>\n
It is now expecting UK inflation to average 4% in 2026, up from the 2.5% forecast in its last report in December, and then decline to 2.6% in 2027, which is up from the previous projection of 2.1%.<\/p>\n
This means the UK is headed towards the second-highest inflation rate this year in the G7 group of advanced economies, behind only the US.<\/p>\n
Chancellor Rachel Reeves said the Iran conflict was \u2018not one that we started, not is it a war we have joined\u2019 (Yui Mok\/PA) \u00b7 Yui Mok <\/p>\n
The OECD also downgraded its outlook for UK gross domestic product, predicting it will be 0.5 percentage points lower in 2026 than prior forecasts, at 0.7%, before rising to 1.3% in 2027, which has not changed.<\/p>\n
This puts the UK at second-lowest in the G7 in terms of economic growth this year, behind only Italy.<\/p>\n
Across the G20 \u2013 which incorporates countries including China, India and Saudi Arabia \u2013 economic growth is projected to weaken in the near term before gradually rising through 2027.<\/p>\n
Chancellor Rachel Reeves responded to the report to say the war in the Middle East \u201cis not one that we started, nor is it a war that we have joined\u201d, adding: \u201cBut it is a war that will have an impact on our country.\u201d<\/p>\n
The OECD said there were a lot of uncertainties about the conflict in the Middle East but that longer-lasting closures to energy infrastructure and shipping could have much bigger consequences to global economies than was currently expected.<\/p>\n
A sustained spike in global energy prices will add significantly to business costs and raise inflation, which would weigh on growth, according to the report.<\/p>\n
\u201cA prolonged period of disruption could also result in the emergence of significant energy shortages that would lower growth further,\u201d the OECD said.<\/p>\n
It referred to some Asian governments which have already taken steps to mitigate the risk of shortages, such as energy rationing for businesses in India and energy export restrictions in China.<\/p>\n
Furthermore, the report warned over a sharp increase in fertiliser prices since the conflict escalated at the end of February, with regions in the Middle East big producers of things like urea and ammonia.<\/p>\n
Supply shortages \u201ccould increase global food prices, with potentially serious impacts to household finances and inflation expectations\u201d, the OECD warned.<\/p>\n
The organisation\u2019s economists said the world\u2019s central banks need to stay \u201cvigilant\u201d to keep inflation under control in response to the increased risks to global prices.<\/p>\n
It added that governments\u00a0should encourage more efficient energy use in homes and across industries while making sure that\u00a0support to offset higher energy prices is targeted at households most in need.<\/p>\n
In the longer term, it argued that governments need to do more to reduce dependence on fossil fuel imports which would make them less vulnerable to geopolitical shocks.<\/p>\n
Ms Reeves added: \u201cIn an uncertain world we have the right economic plan.<\/p>\n
\u201cThe decisions we have taken have put us in a better position to protect the country\u2019s finances and family finances from global instability.<\/p>\n
\u201cOur economic plan means going further to build a stronger, more secure economy.<\/p>\n
\u201cThat means going further on our three big choices: empowering regional growth, embracing AI and innovation, and establishing a closer relationship with the EU.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"The UK is set to face significantly weaker economic growth this year and surging inflation, with a prolonged…\n","protected":false},"author":2,"featured_media":36897,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[1169,13316,16413,1790,34,49,16411,16414,2676,811,16412],"class_list":{"0":"post-36896","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-iran","8":"tag-economic-growth","9":"tag-food-prices","10":"tag-global-economies","11":"tag-global-energy","12":"tag-iran","13":"tag-middle-east","14":"tag-oecd","15":"tag-organisation-of-economic-co-operation-and-development","16":"tag-rachel-reeves","17":"tag-uk","18":"tag-worlds-largest-economies"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116295028206374833","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/36896","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=36896"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/36896\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/36897"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=36896"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=36896"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=36896"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}