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The Guardian - UK
The Guardian - UK
Business
Richard Partington Senior economics correspondent

UK faces £35bn hit and risk of recession this year over impact of Iran war, thinktank warns

United Kingdom Niesr Iran Rachel Reeves Recession Economy Inflation Sir Keir Starmer Britain
Canary Wharf in London
Niesr has downgraded its previous UK growth forecasts for 2026 by 0.5 percentage points, to 0.9%, and by 0.3 percentage points in 2027, to 1%. Photograph: Victoria Jones/PA

Britain is facing a £35bn economic hit and the risk of a recession this year as the fallout from the Iran war adds to the pressure on Keir Starmer’s government, a leading thinktank has warned.

The National Institute of Economic and Social Research (Niesr) said that even under a best-case scenario the UK economy would grow at a much slower pace this year and next because of the Middle East conflict.

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