Monday, September 15, 2008

Business Leaders Say Britain Slipping Into Recession

Source : The Business Times, September 15, 2008

LONDON - Britain's main association of business leaders became the latest group on Monday to warn that the country was slipping into a recession, although it said the downturn should be short-lived.

In its latest economic forecast, the Confederation of British Industry (CBI) predicted a 'shallow recession' with the economy shrinking by 0.2 per cent between July and September and a further 0.1 per cent by the end of the year.

A recession is defined as two consecutive quarters of negative growth.

The outlook follows similar predictions by the European Commission and the Paris-based Organisation for Economic Cooperation and Development (OECD).

The CBI cut this year's growth forecast from 1.7 to 1.1 per cent and said unemployment would likely top two million next year.

It also downgraded the 2009 growth forecast by 1 per cent, predicting the British economy will grow just 0.3 per cent over the 12 months - the lowest rate since 1992.

'Over the past year our forecasts for economic growth have been shaved lower and lower as the UK economy continues to struggle with the twin impact of higher energy and commodity prices and the credit crunch,' said CBI director-general Richard Lambert.

He added: 'Having experienced a rapid loss of momentum in the economy over the first half of 2008, the UK may have entered a mild recession that will hopefully prove short-lived.

'This is not a return to the 1990s, when job cuts and a slump in demand were far more prolonged.' -- AFP

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