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

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

Scott Bessent, the U.S. Treasury Secretary, emphasized that a modest economic sacrifice was justified to mitigate the danger of Iranian nuclear strikes on key Western cities. Amid warnings from the International Monetary Fund (IMF) that the ongoing conflict between the U.S. and Iran could push the global economy into a recession, Bessent argued that the long-term security gains outweighed immediate financial setbacks.

“I ponder the potential global GDP impact if a nuclear weapon struck London… I prioritize long-term security over short-term economic forecasts,” he stated.

Iran maintains its nuclear program is purely peaceful, while the UK government clarified there was “no assessment” of an Iranian missile threat directed at Europe. Bessent highlighted the certainty of Iran’s capability to strike Western capitals, noting that its recent missile attacks on Diego Garcia confirmed the existence of mid-range ballistic missiles capable of reaching London.

He claimed that US and Israeli strikes had effectively eliminated the “tail risk” of Iranian nuclear threats. Despite the BBC’s prior report indicating a remote chance of such a scenario, Bessent stressed the importance of preemptive action.

IMF Predicts Growth Slowdown Amid Escalating Tensions

The IMF’s World Economic Outlook report warned that sustained oil, gas, and food price spikes could drive global growth below 2% in 2026, marking a potential recession. This would be the fifth such event since 1980, with the latest occurring during the pandemic.

Energy prices surged after the six-week-long Iran conflict disrupted the Strait of Hormuz and stalled peace talks. The IMF noted that prolonged hostilities could lead to soaring inflation, unemployment, and food shortages. However, it acknowledged that the world’s reduced reliance on oil might lessen the impact on consumers.

“A prolonged conflict could mirror the 1970s oil crisis, but with less severe effects on the public due to diversified energy sources,” warned IMF chief economist Pierre-Olivier Gourinchas.

Oil prices fluctuated, reaching near $120 during the conflict but falling to $95 as of Tuesday. The IMF suggested that if the war ended swiftly and energy production stabilized by mid-year, global growth could stabilize at 3.1% for 2026, slightly below earlier projections.

Regional Economic Impacts

The UK is expected to face the most significant economic strain from the energy crisis, with its growth forecast cut to 0.8% for this year from 1.3%. However, a rebound to 1.3% expansion is anticipated next year. Meanwhile, Gulf oil-exporting nations may experience sharp growth declines or even contractions.

Iran’s economy is projected to shrink by 6.1% this year, but a recovery of 3.2% is possible in 2027 if the conflict resolves promptly. Gourinchas cautioned that the duration of the war would determine the severity of the economic fallout, with prolonged tensions risking a deeper slowdown.