Britain in recession for first time since 1991
Britain is in recession for the first time since 1991, official data showed yesterday, triggering a plea from Prime Minister Gordon Brown for renewed international help to tackle the financial crisis.
The Office for National Statistics (ONS) said that gross domestic product (GDP) had shrunk by 1.5 percent in the fourth quarter of 2008 compared with the previous three-month period, when it contracted by 0.6 percent.
The generally-used technical definition of a recession is two quarters running of negative economic growth.
The figure for the final quarter of 2008 showed the biggest fall in GDP since 1980.
Brown said on Friday he was using "every weapon at our disposal" to fight the economic crisis.
"But we need the international co-operation as well," he told BBC radio.
Friday's data sent the British pound sliding to a 23-year low versus the dollar and London's FTSE 100 index of top shares slid under 4,000 points.
Analysts warned of a long journey ahead before the British economy recovered.
"Our current forecast is for UK GDP to contract by 2.9 percent in 2009, with declines in output occurring through all four quarters," said Howard Archer of IHS Global Insight.
"This would be the sharpest contraction since World War II. Furthermore, we see GDP only flat overall in 2010 as recovery develops very gradually."
The British economy grew by 0.7 percent in 2008, the slowest annual rate since 1992, the ONS said on Friday.
Britain joins the United States, the eurozone and Japan in recession as the global economy struggles to recover from the credit crisis fallout.
Germany on Wednesday said it would suffer its worst recession since World War II this year, with half a million more people in Europe's biggest economy expected to lose their jobs.
In Britain, the unemployment rate has jumped to a decade-high 6.1 percent with nearly two million out of work as international groups such as Nissan have slashed local jobs and several retailers have collapsed.
Banks have also cut jobs as they continue to be bailed out by the government.
At the same time, the ONS said Britain's public finances worsened last month to show a record deficit of 44.2 billion pounds (48 billion euros, 61 billion dollars) after the state bailout of Royal Bank of Scotland.
In a bid to stave off a deep recession, the Bank of England (BoE) has slashed British interest rates to an all-time low of 1.5 percent.
However tumbling borrowing costs have deterred foreign investment, severely hurting the pound, which this week also struck an all-time low against the yen and has reached near-parity with the euro.
BoE policymakers earlier this month voted 8-1 to cut interest rates by half a percentage point to the lowest level since the central bank's formation in 1694.
One policymaker, David Blanchflower, voted in favour of cutting rates by 100 basis points, arguing that it was "becoming increasingly probable that there would be a deep and prolonged recession."
The BoE's main task is to keep inflation at a government-set target of 2.0 percent.
British 12-month inflation dived in December owing to a tax cut on goods and services, falling energy prices and heavy pre-Christmas discounting, official data showed Tuesday.
The Consumer Prices Index (CPI) annual inflation rate sank to 3.1 percent in December, the lowest level since April 2008, from 4.1 percent in November.