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

US Treasury Secretary: Economic Sacrifice Justifies Nuclear Deterrence

Scott Bessent, the U.S. Treasury secretary, has expressed that a “modest economic strain” is necessary to counter the threat of Iranian nuclear attacks on Western cities. Amid concerns raised by the International Monetary Fund (IMF) about the potential for a global economic downturn due to the ongoing conflict between the U.S. and Iran, Bessent emphasized the long-term security advantages of such measures.

“I question how much global GDP would decrease if a nuclear weapon struck London,” he remarked. “I’m more focused on safeguarding the future than short-term economic indicators.”

Iran has maintained that its nuclear program serves only peaceful purposes. The UK government, however, has stated that there is currently no evidence suggesting Iran aims to target Europe with missiles. Bessent argued that the economic cost is secondary to the risks posed by Iran’s missile capabilities, highlighting the country’s ability to strike London with mid-range ballistic missiles after attacks on the Diego Garcia base.

Bessent claimed that U.S. and Israeli military actions have eliminated the “tail risk” of Iranian nuclear strikes against Western nations. While the BBC previously noted the missile threat to London as distant, the secretary’s comments underscore the perceived urgency of preemptive measures.

IMF Warns of Global Growth Slowdown

The IMF warned that a prolonged war could push global growth below 2% by 2026, citing a worst-case scenario where oil, gas, and food prices remain elevated. This scenario would bring the world to the brink of recession, a phenomenon that has occurred only four times since 1980, most recently during the pandemic.

Energy prices surged after the Iran conflict began, following the closure of the Strait of Hormuz and stalled peace talks. The IMF noted that the conflict’s impact on oil supply is comparable to the 1970s embargo, though the current reliance on alternative energy sources may mitigate its effects. As of Tuesday, crude oil prices had dipped to $95 per barrel, down from a peak near $120.

“Prolonged hostilities could trigger runaway inflation, higher unemployment, and food shortages in certain regions,” said IMF chief economist Pierre-Olivier Gourinchas. “Even if the war ended now, the disruption to oil markets would be as significant as the 1970s crisis.”

The IMF also highlighted that the risk of recession escalates if severe conditions persist for two years. If the conflict concludes within weeks and Middle Eastern energy production stabilizes by mid-2026, global growth could rise to 3.1%, slightly below earlier projections. The agency kept its 2027 growth forecast at 3.2%.

Regional Economic Impact

Among advanced economies, the UK is expected to suffer the most from the energy crisis linked to the Iran war. The IMF revised its UK growth estimate for 2026 to 0.8%, down from 1.3%. However, it anticipates a recovery with expansion of 1.3% in the following year.

Oil-exporting Gulf nations are likely to face sharp economic declines or contractions this year. Iran’s economy is projected to contract by 6.1% in 2026, but a rebound of 3.2% is possible if the war ends soon. This outcome remains uncertain.