Trump set to plunge us all into a global recession – with the UK 'most exposed' warns IMF

The influential body said the global outlook had “abruptly darkened” as a result of the conflict, which risks throwing the world economy “off course” and could trigger an energy crisis of unprecedented scale. In a severe scenario involving further turmoil, a worldwide recession could be a “close call”, it cautioned.

Britain faces the sharpest growth downgrade among the major economies, with forecasts cut for the next two years. The IMF also warns that inflation and unemployment in the UK will climb — a fresh blow to Sir Keir Starmer.

Ceasefire hope

Hopes for a de-escalation emerged on Tuesday after Trump suggested ceasefire negotiations with Iran could resume “over the next two days”. Reports also emerged that Tehran is weighing a temporary halt to its shipments through the Strait of Hormuz in an effort to revive talks.

The US president nonetheless renewed his criticism of Britain, repeating calls for the UK to accelerate oil and gas drilling in the North Sea to help ease the growing energy crisis, reports The Times.

Reeves hits out at Trump

Chancellor Rachel Reeves condemned Trump’s “folly” in launching a war without a clear exit strategy, saying she was “very frustrated and angry” with America’s conduct in the Middle East.

She is due in Washington for the IMF’s spring meeting, where she plans to rally other nations behind a co-ordinated response to the crisis.

In its latest economic outlook, the IMF projected UK GDP growth of 0.8 per cent this year and 1.3 per cent next — well below its January forecasts of 1.3 per cent and 1.5 per cent respectively. The UK economy expanded by 1.3 per cent last year.

Inflation and unemployment to rise

The IMF expects UK inflation to average 3.2 per cent this year and 2.4 per cent next, driven by surging energy costs, dearer fuel and rising food prices. Both figures are sharply above its earlier projections of 2.5 per cent and 2 per cent.

Petrol prices have already jumped 19 per cent since the conflict began, with diesel up by more than a third.

Unemployment is forecast to rise to 5.6 per cent this year, up from 4.9 per cent in 2024.