UK Faces Biggest Growth Hit from Iran War Among Major Economies, IMF Warns

The United Kingdom will suffer the largest hit to economic growth of any major advanced economy due to the ongoing Iran war, according to the International Monetary Fund’s latest World Economic Outlook released in April 2026.

The IMF has cut its forecast for UK economic growth in 2026 to just 0.8%, down from a previous projection of 1.3% made before hostilities began. This represents a downward revision of 0.5 percentage points – the largest cut among all G7 economies.

As a net importer of energy, the UK is particularly vulnerable to the impact of higher oil prices resulting from the conflict in the Middle East. The IMF noted that the energy shock from the Iran war will affect the UK more severely than other advanced economies.

In comparison, the United States is projected to grow by 2.3% in 2026, the euro area by 1.1%, Spain by 2.1%, and France by 0.9%. The UK’s revised growth forecast places it below these peers for the current year.

The IMF also warned that the Iran war poses a major challenge to the global economy, which has only recently recovered from significant trade and tariff disruptions. Global growth is now expected to reach 3.1% in 2026, down from 3.4% in 2025, with inflation forecast to rise to 4.4%.

Despite the near-term challenges, the IMF anticipates a recovery for the UK economy, projecting growth to return to 1.3% in 2027 as the effects of higher energy prices gradually fade. But, this recovery is expected to be slower than previously forecast due to the lingering impact of the conflict.

The fund emphasized that prolonged hostilities could further worsen economic prospects, particularly if they lead to sustained increases in public debt or weaken institutional credibility.