‘Bit of pain’ worth long-term security from Iran, Bessent tells BBC

Scott Bessent: ‘Small Economic Cost’ Justified for Iran Threat Mitigation

U.S. Treasury Secretary’s Stance on Iran Conflict

Scott Bessent, the U.S. Treasury Secretary, argued to the BBC that a ‘modest economic setback’ is justified for securing long-term global stability. He emphasized that the ongoing US-Israel war with Iran is aimed at neutralizing the risk of nuclear strikes targeting Western capitals. ‘I wonder what the hit to global GDP would be if a nuclear weapon hit London,’ Bessent reflected. ‘I am saying that I am less concerned about short-term forecasts, for long-term security,’ he added.

“The biggest risk you can take is one you don’t know you were taking. Now we know for a fact that, as the Iranians shot at Diego Garcia, they do have mid-range intercontinental ballistic missiles that could reach London, and we know that they want a nuclear programme,” Bessent stated.

Bessent claimed that U.S. and Israeli military actions have eliminated the ‘tail risk’ of Iranian nuclear attacks. However, the UK government clarified that there is ‘no assessment’ Iran is currently targeting Europe with missiles. Senior U.S. officials noted that Iran had enriched uranium to 60% at the war’s outset, though it lacks a fully developed nuclear weapon.

IMF’s Global Economic Outlook

The International Monetary Fund (IMF) warned that the Middle East conflict could push the global economy toward recession. In its World Economic Outlook report, it outlined a worst-case scenario: if oil, gas, and food prices surge and remain elevated for two years, global growth could drop below 2% in 2026. This would mark a near miss for recession, a phenomenon that has occurred just four times since 1980, most recently during the pandemic.

“Once again, the global economy is threatened with being thrown off course—this time by the outbreak of war in the Middle East at the end of February 2026,” the IMF noted.

Energy prices have spiked since the war began, reaching nearly $120 per barrel due to the closure of the Strait of Hormuz and stalled peace talks. However, oil has since retreated to $95. The IMF cautioned that prolonged conflict could lead to inflation surpassing 6%, rising unemployment, and food shortages in certain regions. Yet, it also highlighted that reduced reliance on fossil fuels has lessened the impact on consumers.

Regional Economic Impacts

IMF projections indicate the UK will face the most significant economic strain from the energy crisis, with growth forecasts revised downward to 0.8% this year from 1.3%. The nation is expected to rebound with 1.3% expansion next year. Meanwhile, Gulf oil exporters may experience sharp declines or even contractions in growth this year. The IMF estimated Iran’s economy would shrink by 6.1% under the current conflict conditions.

“Gourinchas warned that a protracted conflict would drive inflation, raise unemployment, and create food insecurity in some countries. Even if the war ended today, the disruption to oil supply would rival the 1970s crisis, when Arab producers imposed embargoes on nations supporting Israel,” the IMF chief economist noted.

Despite the challenges, the IMF suggested that if the conflict resolves swiftly and Middle Eastern energy production stabilizes by mid-2026, global growth could stabilize at 3.1% for 2026, slightly below initial projections. Its forecast for 2027 growth remains unchanged at 3.2%.