Reeves Criticizes Trump's Iran War as UK Faces Economic Downgrade

UK Chancellor Rachel Reeves has sharply criticized Donald Trump's war on Iran, describing it as a 'mistake' that has destabilized the global economy and damaged living standards worldwide. The International Monetary Fund (IMF) downgraded Britain's economic growth forecast to 0.8% for 2026, down from a previous projection of 1.3%, marking the largest downgrade among G7 economies.

The IMF linked the weaker outlook to energy price shocks caused by the conflict and slower-than-expected interest rate cuts from the Bank of England. Inflation is expected to peak at around 4% before falling back to the BoE's 2% target only at the end of 2027. Unemployment is projected to rise to 5.6% this year, up from 4.9%. Reeves indicated that temporary, targeted support for households may be forthcoming but faces constraints due to elevated public debt and rising borrowing costs.

Reeves announced an expansion of the British Industrial Competitiveness Scheme (BICS) to cover 10,000 companies, up from 7,000 originally planned. This scheme aims to cut electricity bills by up to 25% for eligible businesses but will not be operational until next year, with support backdated to this month.

The IMF endorsed targeted support measures for affected households while emphasizing the need for long-term investment in renewable energy and economic resilience. Reeves called for the urgent reopening of the Strait of Hormuz to calm global energy prices, stating that the lack of clear US targets in negotiations with Iran had worsened the situation. The announcement was welcomed by business groups but criticized for not providing immediate relief as companies face soaring bills due to ongoing conflict.