OECD: UK recession likely this year

| September 2, 2008 | 0 Comments

According to the Organisation for Economic Cooperation and Development (OECD), it is likely that the British economy will fall into recession during the second half of this year.

It is expected that Britain will be the worst performer out of the world’s wealthiest nations with the economy expected to shrink by 0.3% in the third quarter and 0.4% in the fourth quarter.

The latest official figures revealed that the UK economy ground to a halt in the second quarter of this year.

The forecast from the OECD, which is based in Paris, is the gravest yet and said the definition of a recession is two consecutive quarters of negative growth.

The grave assessment for the British economy has resulted in sterling falling to its lowest level against the euro since the single currency was introduced in 1999. However, this was also due to a warning from the Chancellor, Alistair Darling, who said the UK is facing the worst economic downturn in 60 years and it will be ‘profound and long lasting’.

In its latest report, the OECD says that the UK economy will grow by just 1.2% for the whole of 2008, revised from its previous forecast of 1.8% two months ago. It is also less than the 1.4% predicted by the International Monetary Fund.

The OECD is also pessimistic about growth prospects in the rest of the Euro zone and said Europe’s three other largest economies, Germany, France, and Italy, will hardly grow at all this year.

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