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 US Treasury Secretary, expressed confidence to the BBC that a “modest economic sacrifice” was justified to neutralize the threat of Iranian nuclear strikes targeting major Western cities. His remarks came as the International Monetary Fund (IMF) cautioned that a US-Israeli confrontation with Iran could destabilize the global economy, potentially leading to a recession. Bessent emphasized that security concerns outweighed short-term economic forecasts, stating,

“I wonder what the hit to global GDP would be if a nuclear weapon hit London… I am saying that I am less concerned about short-term forecasts, for long-term security.”

Iran’s Nuclear Claims and UK Response

Iran maintains its nuclear program is entirely peaceful, but Bessent highlighted the risks posed by its military capabilities. He noted that the recent missile attacks on the US base at Diego Garcia confirmed Iran’s ability to strike London with mid-range intercontinental ballistic missiles. The UK government, meanwhile, reiterated there was “no assessment” that Iran aimed to target Europe with weapons, though it affirmed its readiness to defend against any threats.

“We have the military capability we need to keep Britain safe from any kind of attacks, whether it’s on our soil or from abroad,”

a UK spokesperson stated.

IMF’s Economic Outlook and Oil Impact

The IMF warned that prolonged conflict in the Middle East could disrupt global growth, with a worst-case scenario projecting GDP growth below 2% in 2026. This would bring the world close to a recession, a phenomenon that has occurred only four times since 1980, including during the pandemic. Energy prices surged initially after the war began, as the Strait of Hormuz—a vital shipping route—was effectively blocked. However, recent trends show prices have stabilized, with crude oil trading at around $95 per barrel.

IMF chief economist Pierre-Olivier Gourinchas cautioned that a drawn-out war could trigger inflation, unemployment, and food shortages in some regions. He noted that even a brief continuation of the conflict would have impacts comparable to the 1970s oil crisis, when Arab producers imposed an embargo on nations supporting Israel. Gourinchas acknowledged reduced reliance on fossil fuels might mitigate these effects, though severe energy price hikes—such as oil reaching $110 per barrel this year and $125 in 2027—could still challenge global stability.

According to IMF forecasts, the UK economy would face the most severe strain from the energy shock. It revised its 2026 growth estimate down to 0.8%, from 1.3%, but anticipates recovery with 1.3% expansion in the following year. Meanwhile, Gulf oil-exporting nations are expected to experience sharp growth declines, and Iran’s economy could contract by 6.1% this year. The IMF highlighted that a swift resolution of the conflict would ease global growth to 3.1% in 2026, though this remains contingent on energy markets normalizing by mid-year.