Britain facing recession by end of year

Over recent weeks a number of industry professionals and groups have said that Britain will slide into recession by the end of the year. The latest warning comes from the European Union, which has warned that a number of countries face recession by the end of this year. There was also a stark warning from the Organisation for Economic Co-operation and Development, which said that Britain has the worst outlook of any major economy when it comes to growth.

In the second quarter of this year there was zero growth in the British economy, and officials have warned that the next two quarters could show negative growth, which means that by the end of 2008 Britain would be in recession. Officials from the European Commission predict that growth levels for the next two quarters will be -0.2%. This will mean the first recession since the early 1990s.

Officials from the Commission said: ‘The financial turmoil has now entered its second year. Overall, the situation remains fragile as losses continue to mount and confidence in key financial markets is not yet restored. Private consumption is likely to fall somewhat due to the combined impact of tighter credit conditions for household borrowing, weakening housing and labour markets and inflation-induced stagnation in real disposable income.’

The shadow chancellor, George Osborne, stated: ‘Now the EC joins the OECD in saying what Gordon Brown refuses to admit: that Britain is one of the economies worst affected by the global uncertainty. He won’t level with people about the state of the economy, because he was the Chancellor that left us so ill-prepared.’