UK Economy Faces Blow From Trumps Iran Actions

Donald Trump’s war in Iran will deliver a hammer blow to the UK economy, experts have warned.

The OECD think-tank has dramatically downgraded its forecast for Britain’s economic growth in the year ahead, with inflation also set to be far higher than previously thought.

It means Brits will have to brace themselves for higher prices in the shops, a jump in energy bills and soaring mortgage costs.

The findings will pile pressure on chancellor Rachel Reeves to either hike taxes or slash public spending in the next Budget to balance the nation’s books.

Just three months ago, the OECD forecast the UK economy would grow by 1.2% in 2026.

But the Paris-based body has now downgraded that to just 0.7% due to the global uncertainty caused by Trump and Israel’s decision to bomb Iran.

They also said “a prolonged period of disruption could also result in the emergence of significant energy shortages that would lower growth further”.

Meanwhile, the UK rate of inflation is set to hit 4% this year – double the Bank of England’s 2% target and well up on the 2.5% the OECD forecast in December.

It means the UK is set to have the second-highest inflation rate this year in the G7 group of advanced economies, behind only the US.

Reeves said: “The war in the Middle East is not one that we started, nor is it a war that we have joined. But it is a war that will have an impact on our country.”

The OECD report also warned of a sharp increase in fertiliser prices since the war began a month aga, with countries in the Middle East big producers of things like urea and ammonia.

Supply shortages “could increase global food prices, with potentially serious impacts to household finances and inflation expectations”, they said.

Reeves insisted that “in an uncertain world we have the right economic plan”.

But Tory shadow chancellor Mel Stride said: “This downgrade from the OECD is a damning verdict on how vulnerable our economy is thanks to Labour.

“Rachel Reeves has ramped up borrowing, spending and taxes. As a result, we have stagnant growth, while inflation, unemployment, the deficit and debt interest costs have all shot up.

“At the same time, Ed Miliband’s net zero obsession has left us reliant on imported energy instead of using our own supplies in the North Sea.

“Rachel Reeves can blame the world all she wants, but it’s her choices that have weakened our economy at the worst possible moment.”

Daisy Cooper, the Liberal Democrats’ Treasury spokesperson, said: “This dire OECD forecast is a wake-up call that the Government’s anti-growth agenda is leaving families to pick up the tab through soaring food and energy bills.

“The fastest way to break this cycle of stagnation is to get an EU-UK customs union to lower costs, secure our energy future, and finally kickstart real growth.”