Recession a step closer as economy grinds to a halt for the first time since 1992 with growth at 0%
By Justin Harper
Last updated at 3:15 AM on 23rd August 2008
Britain slipped nearer recession yesterday when figures showed the economy had finally ground to a halt.
For the first time in 63 consecutive quarters going back to 1992, growth was officially zero per cent.
The dismal figures put paid to Gordon Brown's boast that the economy had grown in every quarter since Labour came to power.
Recession fears: The UK economy has ground to a complete halt and some experts believe the we are already in a recession
The Office for National Statistics had predicted output for the quarter from April to June to be 0.2 per cent, but even that level of growth could not be achieved.
While a recession technically happens after two quarters of falling economic growth, some experts believe we are already in one.
George Buckley, economist at Deutsche Bank, said: 'The figures are very weak and suggest the UK economy is already in recession.'
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Economists warned that the recession would be a prolonged one unless the Bank of England steps in with an urgent cut in interest rates.
Stewart Robertson, of Morley Fund Management, said: 'The Bank needs to do something to prevent a fairly shallow recession from getting worse. They need to cut rates this year.'
Brian Hilliard, of Societe Generale, said: 'This really does put a rate cut firmly on the agenda, although it is unlikely to come until we have seen the peak in inflation.'
The value of the pound also took a battering in response to the economy's stagnation.
Sterling skidded to a near 12-year low against the dollar as investors were scared off.
But while pressure is growing on the Bank to cut interest rates to try to kickstart the economy, it has its hands tied in other respects because it is trying to fight the growing problem of inflation.
A rate cut could boost the economy, but would also create further inflationary pressures.
Jonathan Loynes, at Capital Economics, said: 'While the Bank of England expected the economy to slow down this news is still pretty devastating. We see the recession becoming deep as it gathers pace.
'The biggest casualty will be some sizeable job cuts.'
The gloomy figures, which bring an end to the longest period of uninterrupted growth for more than a century, also showed how families have been struggling with soaring energy bills and food costs.
Household spending fell by 0.1 per cent - the lowest level for three years as Britons tighten their belts in the credit crunch.
The track record of continuous economic growth has been one of Labour's greatest achievements since coming to power and the cornerstone of Gordon Brown's success as a Chancellor.
The Shadow Chancellor George Osborne said: 'Now economic growth has ground to a halt and Brown's bubble has burst.
'Millions of people are paying an unfair price for Labour's economic incompetence.'
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Last Edited by Phennommennonn on 03/03/2012 07:01 PM
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