Britain 'to be hit harder than any other G7 economy' by war in Middle East
Britain faces a bigger economic slowdown than any other major country as a result of the war in the Middle East, according to a new global forecast.
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The Organisation for Economic Co-operation and Development (OECD) says the UK's economy will grow by just 0.7 per cent this year.
It has slashed its 2026 forecast for UK GDP by 0.5 percentage points, the biggest hit for any member of the G7 group of advanced nations, which also includes the US, Canada, Japan, Germany, France and Italy.
Their forecast remains unchanged for next year with growth expected to be 1.3 per cent.
The OECD says Britain will grow more slowly than every G7 country except Italy this year. Inflation will be second highest in the group, behind only the United States.
The OECD said that it was downgrading its forecasts for growth widely following the sharp increase in the price of crude oil and related products including jet fuel and diesel to fertilisers.
Rise in the prices of these goods will have a major knock-on impact for consumers.
The OECD said ‘planned fiscal tightening’, or tax hikes, as well as higher energy prices, would ‘keep growth subdued’ in the UK.
The OECD said the Iran war will “test the resilience” of the global economy and that the Bank of England would need to “remain vigilant” and ensure that inflation expectations stay “well anchored”.
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.”
Today Iran threatened to block the Suez Canal in response to US aggression.
In a move that will heap further pressure on global supply chains, Tehran has said it is ready to block the Bab al-Mandab Strait, which lies between the Indian Ocean and the Mediterranean Sea through the Suez Canal.
The Strait of Hormuz, is effectively blockaded to almost all naval traffic, peppered with mines which has left international trade paralysed and sent global fuel costs sky-high.
A military source told Iran’s Tasnim news agency that attacks could be launched at ships passing through the Bab al-Mandab Strait in response to US operations.