economy
April 2, 2026
UK faces large-scale economic shock from Iran war, IMF says
The UK is especially exposed to higher energy costs due to its reliance on gas, raising pressure on households and the wider economy, the IMF has warned
TL;DR
- The UK is facing one of the largest economic shocks from the Middle East conflict, according to the IMF.
- The UK is "especially exposed" to surging energy prices due to its reliance on gas-fired power.
- Energy importers across Europe are heavily impacted by price surges following strikes on Iran and retaliatory attacks.
- The Strait of Hormuz being effectively shut has choked off oil flows and driven up fuel costs.
- Heavily indebted governments have little room to cushion the blow, leaving households and businesses more exposed.
- The UK and Italy are among the most exposed, while France and Spain are relatively shielded.
- Economists warn the UK economy is in a weaker position than four years ago, when Russian gas and oil were phased out.
- Howard Davies warns of an energy crisis comparable to the 1970s.
- UK natural gas prices have more than doubled since December.
- Brent crude prices topped $116 earlier this week before easing to about $100 a barrel.
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