US Treasury secretary tells BBC ‘bit of pain’ worth long-term security

US Treasury Secretary Tells BBC ‘Bit of Pain’ Worth Long-Term Security

US Treasury Secretary Scott Bessent emphasized to the BBC that a “small bit of economic pain” was necessary to address the nuclear threat from Iran. He argued that the long-term advantages of security outweighed immediate economic challenges. “I wonder what the hit to global GDP would be if a nuclear weapon hit London,” Bessent said, noting his focus on sustained safety rather than short-term forecasts.

“I am less concerned about short-term forecasts, for long-term security,” he remarked.

Iran has consistently claimed its nuclear program is peaceful, while the UK government stated there was “no assessment” that Iran intended to target Europe with missiles. Despite this, Bessent stressed the importance of recognizing the risk posed by Iran’s capability to strike Western capitals. “We now know for a fact that, as the Iranians shot at Diego Garcia, they do have mid-range intercontinental ballistic missiles that could reach London,” he explained.

IMF Warnings of Recession

The International Monetary Fund (IMF) warned that the US-Israel conflict with Iran might lead to a global economic downturn. In a worst-case scenario—where oil, gas, and food prices rise sharply and remain elevated for two years—global growth could drop below 2% in 2026. “This would mean a close call for a global recession, which has occurred only four times since 1980,” the IMF noted, referencing the most recent instance during the pandemic.

Global Economic Impact

Energy prices surged after the Iran conflict began over six weeks ago, driven by the closure of the key Strait of Hormuz and stalled peace talks. The IMF described the situation as a “threat to the global economy being thrown off course.” Its chief economist, Pierre-Olivier Gourinchas, warned that prolonged conflict could trigger inflation, unemployment, and food shortages in some regions. “Even if the conflict ended today, the impact on oil supply would rival that of the 1970s oil crisis,” he added.

“The world is now less dependent on oil and fossil fuels, so the impact on consumers would be less severe,” Gourinchas said.

While oil prices reached near $120 during the conflict, they have since retreated to $95 per barrel. The IMF cautioned that the risk of recession would grow if severe conditions persisted beyond 2026. It projected global growth at 3.1% for 2026, down from an earlier forecast of 3.3%, and kept its 2027 growth estimate unchanged at 3.2%.

Country-Specific Projections

The IMF highlighted that the UK would be most vulnerable to the energy shock caused by the Iran war. It revised its UK growth forecast for 2026 to 0.8%, from 1.3%, but predicted a rebound to 1.3% in 2027. Meanwhile, Gulf oil-exporting nations face a potential slowdown or contraction this year. Iran’s economy is expected to shrink by 6.1% in 2026, though a recovery of 3.2% is possible if the war ends soon.

On Sunday, US President Donald Trump announced a blockade of Iranian ports to s