Iran war escalation could trigger global recession, IMF warns

UK suffers sharpest downgrade and is predicted to face joint highest inflation in G7 as growth forecasts are cut

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A further escalation in the Iran war could trigger a global recession, spiralling inflation and a sharp backlash in financial markets, the International Monetary Fund has warned.

Against an increasingly volatile backdrop, the Washington-based fund said the economic damage from the Middle East conflict was steadily rising as it cut its growth forecasts for 2026 based on the impact from the war so far.