TUAC challenges the OECD’s macroeconomic response to the war in Iran, warning that the Interim Economic Outlook published on 26 March repeats the mistakes of the recent cost-of-living crisis by leaning on central banks to manage a supply-side shock that monetary policy cannot fix.
The Outlook holds global growth at 2.9% in 2026, acknowledging that without the conflict it would have reached 3.2% – yet still treats the shock as contained. Trade unions dispute this. The Strait of Hormuz carries around 25% of global seaborne oil trade, virtually all of Qatar and the UAE’s liquefied natural gas output, and key inputs including fertilisers and helium. Experts estimate that damage to extraction and storage infrastructure on both sides of the conflict will take years, not months, to repair. TUAC argues that the OECD is underestimating the scale of the crisis, and that its proposed response – limited fiscal support and continued reliance on monetary policy – is wholly inadequate.
Monetary policy alone cannot address inflationary pressures driven by external conflicts and supply shocks. Governments must step in with measures to contain prices and curb excess profits, support for households still reeling from the cost-of-living crisis. Sustained investment in green energy sources is also urgently needed to reduce long-term exposure to commodity shocks.
Workers enter this crisis from a position of weakness. As the latest OECD Wage Bulletin confirms, real wages in around half of OECD countries have yet to recover to early 2021 levels, with average and median wages lagging particularly far behind. Labour markets are cooling in both the United States, where employment fell unexpectedly in February, and across Europe, where transitions from unemployment into work have slowed to pre-pandemic levels. Under these conditions, trade unions contend that even maintaining current interest rates is effectively restrictive, and that further tightening would risk tipping already fragile economies into recession.
Trade unions demand an expansionary macroeconomic strategy, warning that any monetary tightening risks compounding the damage to already fragile economies. . At the same time, the need for public and private investment is more urgent than ever, together with transfers to households, energy price caps, and measures to prevent corporate profiteering of the kind that worsened the impact of the 2022 energy shock and prolonged the cost-of-living crisis. TUAC also insists on sustained investment in renewables and energy efficiency to reduce long-term dependence on volatile commodity markets.
Read TUAC’s full analysis here.
