Time to wrap up….

The head of the International Monetary Fund has encouraged countries to consider ways to conserve energy, warning that the impact of the Iran war will linger even once the conflict ends.

Kristalina Georgieva told reporters in Washington DC that countries should consider measures to cut energy demand, such as free public transport or encouraging working from home.

Georgieva warned countries against taking untargeted actions such as broad energy subsidies to offset the impact of higher prices, saying they would only “prolong the pain of high prices.”

She warned that there are shortages of oil and gas, naptha, helium and other products in Asia, and expressed concerns about the risk of higher food price inflation unless fertilizer delivery at reasonable prices resume soon.

Georgieva also advised central banks to resist the urge to hike interest rates in response to the Middle East crisis, while also suggesting that those with low credibility may need to act faster.

She was speaking at the IMF’s spring meeting, where the Fund also warned that global debt levels continue to rise, and could be pushed highed by the Iran war.

In its half-yearly fiscal monitor, the IMF said global debt levels were on track to increase because the war was pushing up the price of energy and food, fuelling higher government borrowing costs, and hitting economic growth.

After a rise in gross government debt levels to almost 94% of GDP last year, it warned this figure was on track to reach 100% by 2029, a level previously reached only in the aftermath of the second world war.

But the IMF did applaud the UK’s efforts to bring down its budget deficit.

That might cheer chancellor Rachel Reeves, who has also been busy in Washington DC today.

Reeves has stepped up her criticism of Donald Trump’s war on Iran, describing it as a “mistake” that has destabilised the global economy and damaged living standards around the world.

Rachel Reeves has stepped up her criticism of Donald Trump’s war on Iran, describing it as a “mistake” that has destabilised the global economy and damaged living standards around the world, my colleague Richard Partington reports from Washington DC.

In a marked fraying of the transatlantic relationship, the UK chancellor said Trump breaking off from diplomatic talks with Iran and launching airstrikes had not made the world a safer place.

“I think it was a mistake to end those [talks with Iran] and to enter into conflict, because I’m not convinced that we are safer today than we were a few weeks ago,” she told an event in Washington.

The comments on the president’s home turf reinforce comments Reeves made just before flying out on Tuesday, when she expressed frustration at the “folly” of his decision to go to war without a clear exit plan.

Speaking as she prepared to meet finance ministers from around the world, Reeves said the war and particularly the halting of Gulf shipping was damaging the living standards of families and businesses in the UK and the US.

More here:

Elsewhere at the spring meeting today, the World Bank Group has just launched a new initiative to bring water security to over 1 billion people by 2030.

The “Water Forward” program will “expand reliable water services and strengthen systems against droughts and floods.”

The Bank said its own funds and technical advice would help improve water supplies to about 400 million people by 2030, with the balance coming from partners.

Speaking at the launch event in Washington DC, WaterAid UK chief executive Tim Wainwright said:

“Water underpins heath, education, gender equality, economies and jobs. But progress has been too slow. What has been missing, is political will and finance. Water Forward brings exactly those two ingredients for change.

Water is the foundation of everything - none of us can live without it .”

The Financial Times has spotted that UK gas prices have dropped back to pre-war levels.

They report:

UK prices, which hit a three-year high of 180p per therm (€71 per megawatt hour) on March 19, have since reversed course to fall to 104p per therm, below prices in January, which peaked at 113p a therm.

European prices have also retreated, with the benchmark dropping to €41.35 per MWh (105p per therm), down from a high of €74 per MWh in mid-March.

Kristaline Georgieva goes on to pay tribute to the UK government’s approach to the current economic challenges.

Georgieva tells Bloomberg TV the UK has a “very mature” approach to policy, and is very careful not to launch indiscriminate spending.

The Bank of England is very clear about the approach they’re going to take, the right approach to this situation, she says.

Georgieva adds that:

We see the UK’s fiscal response as a good example for other countries.

She contrasts it with other countries who are looking to spend money they don’t have.

Support measures have to be targeted, temporary, and within a country’s fiscal bounds, she explains.

The head of the IMF has predicted that at least a dozen countries, including some in Sub-Saharan Africa, will seek new lending programmes due to surging energy prices and supply chain disruptions caused by the war in the Middle East.

International Monetary Fund managing director Kristalina Georgieva has repeated her estimate that the war could trigger demand for $20bn to $40bn in lending that could include augmentation of existing programs and new programs.

Georgieva began her press conference in Washington DC (see the top of this blog to watch it) by telling reporters that her hopes and prayers are for the Middle East ceasefire to lead to a durable peace.

Georgieva also warned countries against taking untargeted actions such as broad energy subsidies to offset the impact of higher prices, saying they would only “prolong the pain of high prices.”

She warned that there are shortages of oil and gas, naptha, helium and other products in Asia, and expressed concerns about the risk of higher food price inflation unless fertilizer delivery at reasonable prices resume soon.

As flagged earlier (here), the IMF is also encouraging countries to economize energy use, through measures such as free public transport.

Georgieva argues that the energy shock will incentivize measures to reduce demand.

IMF chief Kristalina Georgieva is taking questions now at a press conference at the IMF’s Spring Meeting – you can watch it online at the top of this blog.

Asked about the impact of the Iran war on the global economy, Georgieva says the IMF is “concerned about the physical breakdown in supply chains”.

She points out that the disruption caused by the conflict will not be resolved straight away once it is over.

She points out that tankers are slow-moving vessels, saying:

It will take 40 days to get all the way to Fiji [from the Middle East].

As such, countries should take stept to economise energy, she says – pointing out that some countries doing exactly that, such as:

• Using measures to economise energy – such as making public transport free.

• Encourging people to work from home – Georgieva point out that “we did it though Covid”.

• Encouraging a switch to less energy-intensive activities over time.

A group of 11 finance ministers, including UK chancellor Rachel Reeves, are calling for a swift and lasting negotiated resolution to the conflict in the Middle East.

In a joint statement, finance ministers from the United Kingdom, Australia, Japan, Sweden, the Netherlands, Finland, Spain, Norway, Ireland, Poland and New Zealand warn that the Iran war will continue to weigh on global growth, inflation and financial markets even once it is durably resolved.

The group of finance chiefs are calling on all parties to implement the ceasefire in full, saying:

The past weeks have brought unacceptable loss of life and significant disruption to the global economy and financial markets, and the ceasefire will be crucial to protecting civilian populations and the security of the region.

They also call for a swift and lasting negotiated resolution to the conflict, and a return to free and safe transit through the Strait of Hormuz.

The group also call for an end to protectionist actions in hydrocarbon and other supply chains, adding “We commit to promoting cooperation and integration to support regional and global stability.”

And they conclude by reaffirming “unwavering support for Ukraine” and pledge to maintain economic pressure on Russia, saying:

Russia’s war in Ukraine, now in its fifth year, continues to negatively impact the global economy. Russia must not benefit from this conflict, and as market conditions allow to avoid exacerbating disruptions to supply chains and energy prices, we will continue collaborating on ways to increase pressure. We remain committed to upholding the rules based international system.

Donald Trump has added to geopolitical risk today by threatening to row back on the trade deal the US signed with the UK last year.

Professor Costas Milas, of the Management School at University of Liverpool, has created a graph showing how Trump can inflame geopolitical risk, for months.

Professor Milas explains:

President Trump keeps on dominating the news with aggressive, contradicting, and often opaque statements. His latest one? That he might reconsider the US-UK trade deal.

There is no doubt, in my mind, that Trump himself is a big source of geopolitical risk. Why? Consider a Google measure of Trump dominating the news together with global geopolitical risk acts (from the website of Matteo Iacoviello). I collect monthly data from 2015 (first term of Trump as President) and show below how a “shock” to Trump news raises global geopolitical risk acts for as many as nine (9) months.

The impact is statistically significant using a 95% confidence interval. World leaders do take notice!

The IMF is also warning governments to be careful when providing support to citizens through the cost of living pressures created by the Iran war.

In a blog post to accompany today’s Fiscal Monitor, they say:

If governments decide to help companies and families facing higher energy or food costs, this support should be targeted and temporary, focusing on those most exposed and least able to absorb price increases. Many countries built effective social safety nets during the pandemic; these mechanisms can—and should—be used again.

Countries with “narrow fiscal space” should avoid financing support measures with additional borrowing, the Fund argues, saying:

A better approach is to reallocate spending within the same limits and prioritize crisis-related spending (which could be more politically feasible).

The alternative is to lock in higher debt and higher interest costs, which will eventually force tougher choices—or worse, destabilize government debt markets and worsen conditions today.

Newsflash: The International Monetary Fund has applauded the UK’s progress in reducing its budget deficit last year.

A day after slashing the UK’s growth forecasts, the IMF cited Britain as an example of an major economy which managed to trim its borrowings, after the UK’s deficit fell from 6.1% of GDP in 2024 to 5.4% in 2025.

In its latest Fiscal Monitor report, just released at its spring meeting in Washington, the IMF says:

In 2025, the headline deficit for advanced economies excluding the United States held broadly steady at 2.4% of GDP. The debt-to-GDP ratio for these economies fell only marginally to 95.3%, effectively unchanged from its 2019 level prior to the COVID-19 pandemic.

The United Kingdom recorded a notable improvement, reducing its deficit to 5.4% of GDP, with the change driven by tax increases, tax threshold freezes, and the expiration of temporary measures for energy support.

Canada and Japan also posted gains, reflecting spending restraint. These gains were partly offset by the use of some fiscal space by countries with historically strong fiscal positions, such as Korea and The Netherlands.

The IMF is forecasting that the UK’s annual budget deficit will drop to 3.9% of GDP this year, and continue falling until 2031 when it will be 1.6% of GDP, the second-lowest in the G7 after Canada.

In contrast, the US will need revenue and expenditure measures over the medium term to control its deficit, given “the persistence of primary spending and the scale of projected deficits”, the IMF says.

The Fund also warns Rachel Reeves not to stray from her fiscal rules, saying:

In the United Kingdom, adhering to established spending envelopes while strengthening the efficiency of value-added and property taxes is key to rebuilding buffers.

Newsflash: The International Monetary Fund is warning that the war in the Middle East has added a new source of fiscal pressure to the global economy.

In its latest Fiscal Monitor report, just released, the IMF points out that global public debt dynamics did not improve in any material way in 2025, even before the Iran conflict drove up the oil price.

It says:

The conflict has material global reach, disrupting energy supplies, tightening financial conditions, and forcing governments to choose between shielding their populations from price spikes and preserving fiscal space.

The IMF also warns that the fiscal picture has worsened coompared with a year ago – when Donald Trump’s trade wars were causing instability.

Global gross government debt rose to nearly 94% of GDP in 2025, and is on track to reach 100% by 2029, for the first time since the aftermath of the second world war (as the IMF also warned last October).

The IMF says the the projected increase in global debt largely reflects the increase in debt in the world’s two largest economies, China and the US, explaining:

The United States is running a general government deficit of 7 percent to 8 percent of GDP despite operating near full capacity, with no debt consolidation plan in sight, and its gross debt is projected to reach 142 percent of GDP by 2031.

China’s near-term fiscal expansion, aimed at supporting domestic demand amid deflationary pressures, has widened the country’s overall deficit to nearly 8 percent of GDP, and persistent large deficits are expected to push its debt toward 127 percent of GDP by 2031.

The US Treasury Secretary Scott Bessent says the economic shock from the Iran war will pass without driving up long-term inflation in the US, my colleague Richard Partington reports from Washington DC.

“This war will end. I don’t know if it’s 3 days, 3 weeks, 3 months, but we will get on the other side of this,” Bessent said.

“There’s always a catch-up, there’s pent-up demand.”

Speaking at the CNBC Invest in America conference in Washington on Wednesday, Bessent also said the US Fed was in danger of being caught out by falling inflation.

“I understand why they’re doing it [holding on rates]. It wouldn’t be necessarily my base case. I ‘d at least be ready to cut and I’d have an open mind that they may need to cut more because they’ve waited longer.”

The French luxury group Hermès has reported that the Iran war is hitting sales in France, as fewer tourists visit Paris and high-spending shoppers pull back on buying designer products amid growing concerns over the conflict’s toll on the global luxury sector.

Sales of its flagship Birkin and Kelly handbags as well as silk scarves and perfume rose by 6% in currency-adjusted terms, underperforming analysts’ expectations in the first-quarter of 7.1%. Currency fluctuations pulled the company’s revenue down by €290m (£250m), prompting a 1% drop in reported sales to €4.07bn compared to €4.13bn last year.

Hermès has said that sales in France have been “affected by a slowdown in tourist flows” owing to the US-Israeli war with Iran, adding that it is hitting sales in concession stores at airports and in other key markets such as the Middle East. Despite being the fastest-growing region for Hermès in 2025, sales in the Middle East dropped by 6% in currency-adjusted terms, to €160m, compared to €185m euros in 2025’s first quarter.

The company’s chief financial officer, Éric du Halgouët, cited “the geopolitical events affecting the region in March,” as playing a significant part in the downturn.

Hermès is the latest luxury group to report a slump in sales following the outbreak of the conflict in late February. Major rival in the sector LVMH, the world’s largest luxury group reported its seventh consecutive quarter of declines on Monday, rising just 1%. French luxury goods company Kering also reported an 8% tumble in sales at its key brand Gucci this week.

Executive chair of Hermès, Axel Dumas, said: “In a tense geopolitical environment, Hermès maintains its course, true to its long-term strategy…continuing its profitable growth in 2026 with confidence and conviction.”

Shares in Hermès are down 8%, having dropped by 14% at the start of trading.

Pizza chain Franco Manca is to close 16 of its 70 restaurants via an insolvency process with the likely loss of about 225 jobs.

The company said “external cost pressures” including increases in the legal minimum wage, business rates and employers’ national insurance contributions, meant a number of its restaurants were “no longer sustainable.”

The casual dining chain, which is part of Fulham Shore, which also owns The Real Greek chain, is owned by Toridoll, the Japanese operator of Wok to Walk and Marugame Udon, and restaurant sector investment fund Capdesia.

It recently appointed advisory firm Alvarez & Marsal to look at options for the future of the business and is thought to have considered a number of takeover bids before deciding to implement a Company Voluntary Arrangement (CVA)a, an insolvency process under which a company can cut rents and exit leases.

A sale of The Real Greek is still under consideration, according to Propel, the industry newsletter which first reported the CVA.

Marcel Khan, the chief executive of The Fulham Shore which was bought by Toridoll and Capdesia for £93m in 2023, said:

“Over the last two years under our current management, we have been making strong progress against several key performance indicators, with productivity, customer satisfaction, happiness ratings, loyalty and frequency improving significantly.

However, even restaurant businesses that are doing all the right things from a customer and operational perspective are not immune to widely publicised pressures impacting the hospitality industry. This includes significant increases in National Insurance and the national living wage in recent history, as well as a lack of business rates relief for the restaurant sector and disproportionately high VAT in the UK compared with Europe.

As a result of these external cost pressures, we have to make sure that we are putting our business on a sustainable footing for long-term growth and development. This is why we have taken the difficult decision to undertake a CVA for Franco Manca, which will see a minority proportion of our restaurants closing where they are no longer sustainable in this cost environment.

“We are deeply saddened by the closures of a minority proportion of our restaurants, and will support our affected team members throughout this process in every way that we can.”

Bank of America has become the latest Wall Street bank to post a jump in profits after the Iran war created market volatility.

BofA has reported a 17% jump in net income in the first quarter of this year, up to $8.6bn from $7.4bn in January-March 2025.

Revenues rose by 7%, including a 21% jump in investment banking fees, and a 13% rise in sales and trading revenue at the bank’s global markets division.

Chair and CEO Brian Moynihan attributed the jump in earnings to “disciplined execution”, adding:

Revenue growth of 7% year-over-year included net interest income that was better than we expected, up 9%, as well as double-digit growth in sales and trading revenue, investment banking fees and asset management fees.

We remain watchful of evolving risks. However, we saw healthy client activity, including solid consumer spending and stable asset quality, indicating a resilient American economy.

A US-sanctioned tanker. which sailed through the strait of Hormuz yesterday has now pulled a u-turn and returned to the Gulf, shipping data shows.

Rich Starry, which had been placed under US sanctions for dealing with Iran, abruptly turned north last night and headed back towards the strait.

This indicates it failed to break through the US blockade on vessels calling at Iranian ports.

Another sanctioned tanker, Elpis, has stopped near the place where Rich Starry turned around…

The oil price has pushed higher, following a report that the US is sending “thousands” more troops to the Middle East.

According to the Washington Post, the Pentagon is sending thousands of additional troops to the region. The move is to put pressure Iran into agreeing a deal, but US officials have also said they are considering the possibility of additional strikes or ground operations if the ceasefire does not hold, they say.

The Washington Post reports:

The forces moving into the region include about 6,000 troops aboard the aircraft carrier USS George H.W. Bush and several warships escorting it, said current and former officials, who like some others spoke on the condition of anonymity to discuss military movements.

About 4,200 others with the Boxer Amphibious Ready Group and its embarked Marine Corps task force, the 11th Marine Expeditionary Unit, are expected to arrive near the end of the month.

Brent crude is now up 1.2% at around $96 a barrel.

The financial markets are being ‘naive’ if they think the Middle East conflict is resolved, Harvard University professor Kenneth Rogoff has suggested.

Rogoff says it’s ‘puzzling’ that the markets are taking a ‘no problem’ approach to the war, with US stocks near record highs amid hopes that US-Iranian peace talks could resume in Islamabad later this week.

Speaking to Bloomberg TV, Rogoff says:

I think it’s naive to think it’s mission accomplished. I think it’s a temporary respite.

The Iranian regime is still in place, Frankly the US regime is still in place, and I think more things will happen.

But…the markets have just decided it doesn’t matter, everything’s going to be fine. I think it’s a little naive.

Rogoff warns that the war is already a “big stagflationary shock”, on top of the impact of Donald Trump’s tariffs which is still working its way through the system.

Over the medium term, this pushes interest rates up, not down, he explains.

Record-high export revenues from crude oil have pushed Norway’s trade surplus to its highest level since January 2023.

Statistics Norway has reported that the country’s export revenues rose to NOK 199.9bn (£15.6bn) in March 2026.

That includes exports of crude oil worth NOK 57.4bn (£4.5bn), an increase of 67.9% compared to the same month the previous year, due to increased prices and volumes.

Statistics Norway senior advisor Jan Olav Rørhus says:

The closure of the Strait of Hormuz has caused a significant supply shock in the oil market, which contributed to the high oil prices in March, and thus the highest export value ever.

Rørhus also flagged that “very high mainland exports and large gas revenues” also boosted Norway’s exports.

The trade surplus came in at NOK 97.5bn in March 2026.

Bloomberg are predicting a ‘tense meeting’ between Scott Bessent and Rachel Reeves at the IMF later today, reporting:

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

The relationship between the two countries looks increasingly fraught. On Tuesday, Reeves used her strongest language yet to criticize Donald Trump’s war in the Middle East and the damage it has wreaked on the global economy.

“I do feel very frustrated and angry that the US went into this war without a clear exit plan, without a clear idea of what they were trying to achieve. And as a result the Strait of Hormuz is now blocked,” Reeves told the Mirror newspaper.

Inflation in France rose faster than initially thought in the first month of the Iran war.

Consumer prices in the eurozone’s second-largest member rose by 2% year-on-year in March, on an EU-harmonised basis, up from the first estimate of 1.9%.

Statistics body Insee reports that energy prices rose sharply; they rose by 7.4% year-on-year in March, up from ‑2.9% in February, adding:

The high inflation of petroleum products (+18.1% after ‑2.2%) was mostly due to the one of diesel (+23.5% after ‑1.4%), petrol (+9.9% after ‑3.8%) and liquid fuel (+40.9% after ‑0.4%).

Britain’s largest housebuilder is cutting back on its land purchases, after the Iran war drove up mortgage rates.

Barratt Redrow has told the City it is being more selective when buying land to build homes on, due to “recent geopolitical events” and their likely impact on mortgage rates and build cost inflation.

The company now expects to spend between £700m and £800m on new land this financial year, down from previous guidance of £800m-£900m .

That will buy between 7,000 and 9,000 plots, below its previous guidance range of between 10,000 and 12,000 plots.

Barratt Redrow also warns that higher energy costs are likely to push up the cost of building materials.

UK chancellor Rachel Reeves is set to meet her US counterpart, Scott Bessent, in Washington DC today at the spring meeting of the International Monetary Fund and the World Bank.

The impact of the Iran war will surely be high on the agenda – an issue where the two finance ministers may not see eye to eye.

Overnight, Bessent has told the BBC a “small bit of economic pain” is worthwhile for long-term international security.

Reeves, reeling from seeing the UK’s growth forecasts downgraded yesterday, may not agree. She has already spoken of her anger and frustration at the “folly” of America’s actions in the Middle East and its financial impact it is having on UK families and businesses.

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

Hopes of a peace deal in the Middle East are pushing markets higher, helping equities to recover their losses since the Iran war began.

The US stock market is closing in on a record high, after the S&P 500 share index recovered all its losses since the conflict began at the end of February.

Markets in Asia – which is particularly vulnerable to the energy shock – are following; MSCI’s broadest index of Asia-Pacific shares outside Japan has gained 1.5% today to reach its highest level in six weeks.

Japan’s Nikkei has almost recovered its losses since the US-Israeli attacks began, while China’s CSI 300 share index has hit a six-week high this morning, touching its highest level since 3 March.

Optimism has seeped back into the markets, after a volatile March, on hopes that talks between Washington DC and Tehran during the current ceasefire might yield a breakthrough.

Tony Sycamore, market analyst at IG, says events in April have culminated in “a spectacular market rally”:

The Nasdaq has now risen for 10 consecutive sessions, marking its longest winning streak since late 2021, while the S&P500 overnight closed more than 10% above its March low of 6316.

While the situation in the Strait of Hormuz remains incredibly tense, markets are, by their very nature, forward-looking. Right now, equities are actively pricing in the end of this geopolitical chapter rather than dwelling on the current stalemate.

Take the nuclear negotiations, for example. Iran appears prepared to halt uranium enrichment for five years, whereas the US is demanding twenty. A compromise somewhere in the middle—perhaps around the ten-year mark—feels realistic and entirely within reach.

Overnight, Donald Trump has said that US-Iranian peace talks could resume in Islamabad over the next two days, and complimented the work of Pakistan’s army chief as mediator.

In the meantime, traffic through the the strait of Hormuz remains disrupted, with the US blockading Iraniain ports.

The US dollar is lingering near six-week lows today, having recently lost nearly all the gains it had made since the Iran war erupted.

The agenda

• Noon BST: US weekly mortgage applications data

• 12.30pm BST: US treasury secretary Scott Bessent speaking at CNBC conference:

• 1.30pm BST: NY Empire State Manufacturing Index

• 2pm BST: IMF to release its fiscal monitor

• 2.30pm BST: UK chancellor Rachel Reeves speaking at CNBC conference

• 3.15pm BST: IMF press conference on the fiscal monitor