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UK Growth to 0.9% as Iran War Risks Recession

4/29/2026

40 5 Full Breakdown

Summary

NIESR Cuts Growth

NIESR cut 2026 UK GDP growth forecast to 0.9% and warned Iran war could cause a £35 billion loss and recession in 2026.
It lowered the 2027 outlook to 1.0% and said the Bank of England will raise Bank Rate to 4% in July, with $140 oil forcing a rise to 5.25%.
Chancellor Rachel Reeves faces a fiscal gap, runs primary surpluses—the first since 2001—and sees gilt yields top 5% at 5.07%.

Summary

BRC Warns

BRC said shop price inflation slipped to 1.0% in April, from 1.2% in March.
Food inflation fell to 3.1% in April, while fresh food stayed 3.9% above a year earlier.
BRC chief Helen Dickinson warned Easter discounts mask a looming rise in consumer costs from the Middle East conflict.
Resolution Foundation says households will be £480 poorer this year from higher energy costs, a point raised by Chancellor Rachel Reeves.

History

Historical Context

The 1973 oil crisis began when OAPEC raised crude from $3 to $12 per barrel in October 1973, striking a United Kingdom dependent on imported oil because North Sea fields would not start production until 1975. That shock forced tightening, a lesson echoed today as NIESR warns of a £35 billion loss from an Iran conflict and the Bank of England targets a 5% gilt yield.

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NIESR Cuts Growth

NIESR cut 2026 UK GDP growth forecast to 0.9% and warned Iran war could cause a £35 billion loss and recession in 2026.
It lowered the 2027 outlook to 1.0% and said the Bank of England will raise Bank Rate to 4% in July, with $140 oil forcing a rise to 5.25%.
Chancellor Rachel Reeves faces a fiscal gap, runs primary surpluses—the first since 2001—and sees gilt yields top 5% at 5.07%.

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