Stories

Thu, 26 Mar 2026

Thu, 26 Mar 2026 UK forecast to see biggest hit to growth from Iran war out of major economies

The OECD downgrades forecasts for many of the world's biggest economies due to the US-Israel war with Iran.

* Economic growth in the UK this year forecast to be 0.7%, down from previous forecast of 1.2%
* Inflation predicted to be higher than expected, with UK inflation forecast to hit 4% this year
* Global growth forecast for this year remains unchanged at 2.9%, but inflation across G20 countries is sharply up to 4%
* Among G7 countries, only the US is predicted to have higher inflation than the UK in the forecast
* Only Italy is expected to see weaker growth among G7 countries
* Wholesale oil and gas prices have soared since the war started due to disrupted supply from the Strait of Hormuz and damage to oil and gas plants in the Middle East
* Prolonged conflict could trigger "significant energy shortages" globally, impacting crop yields and food prices
* UK drivers seeing higher petrol and diesel prices, with heating oil users also affected
* Mortgage lenders have raised rates and axed hundreds of deals due to increased costs