UK economy fails to grow

The UK economy has ground to a halt after data from the Office for National Statistics (ONS) revealed that it did not grow at all in the second quarter of 2008.

The ONS said growth was 0% in the second quarter, below the 0.3% figure recorded for the first quarter of the year.

Many analysts maintain a downbeat forecast for the British economy as the quarterly figures represents the worst since 1992.

Some economists believe that the economy has contracted in the current three months and will continue to do so in the last quarter of 2008, meeting the technical definition of a recession.

According to Paul Dales, an analyst at Capital Economics, the UK economy is poised for a recession and a prolonged period of weak activity.

The ONS kept its gross domestic product estimate steady at zero, having revised it down from 0.2% last month. It revised up, however, its estimate of annual growth from 1.4% to 1.5%.

In related news, a survey from the CBI revealed that thousands of jobs are set to be lost in the financial industry.

The CBI’s quarterly survey of its conditions was carried out with PricewaterhouseCoopers and covering leading banks, building societies, insurers, fund managers and securities houses.

The survey revealed that the amount of business being conducted by financial companies declined over the last three months, falling for the fourth quarter in a row.

Just 10% of financial businesses reported that their turnover had increased while 61% said it had fallen.

John Cridland of the CBI said companies are fearful about the extent and how much longer the credit crunch will continue, consequently, they are looking at reducing headcount.

Over the next quarter, the CBI expects that 12,000 or more jobs will be lost in the financial industry.

In the three months to the end of June, official figures show that 8,000 positions were lost in the sector.

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