Arabic version: اقتصاد المملكة المتحدة يواجه أكبر انخفاض في النمو بين دول مجموعة العشرين

According to BBC News,

The UK is facing the biggest hit to growth from the Iran war out of the G20 major economies, according to the Organisation of Economic Co-operation and Development (OECD). Economic growth in the UK this year is forecast to be 0.7%, a notable drop from the previous estimate of 1.2%. Inflation rates are also expected to rise beyond earlier predictions.

The OECD’s report highlights that the war could lead to “significant energy shortages” worldwide and warns of potential increases in food prices if fertilizer costs remain high. While the OECD maintains its global growth forecast at 2.9% for 2023, it anticipates inflation across G20 countries will rise to 4%, sharply up from a prior estimate of 2.8%. Specifically, UK inflation is now expected to reach 4% this year, an increase from the earlier forecast of 2.5%.

Chancellor Rachel Reeves acknowledged the impact of the Iran war on the UK economy but expressed confidence in the government’s economic strategy. She asserted that recent decisions have positioned the country better to manage financial challenges stemming from global instability. In contrast, shadow chancellor Sir Mel Stride criticized the government, calling the downgrade a “damning verdict” on the economy’s vulnerability, attributing it to Labour’s decisions.

The OECD’s projections rely on the assumption that the current disruptions in the energy market will subside, with oil, gas, and fertilizer prices decreasing after the summer. It emphasized the need for government measures to support households facing higher energy costs. Additionally, UK retailer Next has indicated a potential increase in prices for customers if the conflict continues, citing an estimated £15 million in extra costs related to fuel and air freight if the situation persists for three months.