UK warned cost of living will rise worse-than-feared in next two years due to Iran war

UK warned cost of living will rise worse-than-feared in next two years due to Iran warThe Washington-based International Monetary Fund slashes forecasts for UK economic growth and warned the global outlook has “abruptly darkened”CommentsMoneyGraham Hiscott Business and Consumer Editor14:00, 14 Apr 2026View 3 ImagesThe IMF says Donald Trump's war with Iran has increased the risk of a global recession(Image: Getty)Households in the UK will endure a worse-than-feared cost of living spike for the next two years due to the Iran war, a top body has warned.‌The International Monetary Fund also slashed its forecast for UK economic growth, in a major blow to Chancellor Rachel Reeves and Labour’s plans to kick-start a recovery.‌It came as the IMF spelt out the dire consequences of the shockwaves caused by the Middle East conflict, warning a global recession could be a “close call” in a severe scenario.‌Laying out its first forecasts since US President Donald Trump and Israel launched attacks on Iran at the end of February, the IMF cut its estimates for UK growth this year from the 1.3% it predicted in January to just 0.8% now.View 3 ImagesUS President Donald Trump - receiving a McDonald's food order at the White House - has been accused of causing "Trumpflation" as housing costs rise It also cut its forecast for next year from 1.5% to 1.3%. Piling more misery on families, the influential financial body also reckons inflation will now average 3.2% this year and 2.4% next year.‌Previous forecasts had pointed towards 2.5% inflation for 2026, indicating that it would drop to the 2% target level in 2027.The continuation of the cost of living misery for millions comes on the back of a surge in petrol and diesel prices, and predictions of a rise in energy bills and food costs.To make matters worse, the IMF warned unemployment will worsen further, rising to 5.6% in 2026 from 4.9% last year.‌View 3 ImagesChancellor Rachel Reeves' plans to kickstart the UK econ...