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Britain 'to fall into recession' Britain 'to fall into recession'
(19 minutes later)
German, Spain and the UK will fall into recession in 2008, the European Commission has predicted. The UK, Germany and Spain will fall into recession in 2008, the European Commission has predicted.
In its latest economic growth forecast, Brussels also downgraded its outlook for eurozone growth again. Brussels said the three countries would see two negative quarters of economic growth in a row, which is the technical definition of a recession.
It said the 15-nation bloc would now grow by 1.3% this year, below its previous projection of 1.7%. In its latest economic forecast, the commission also downgraded its outlook for eurozone growth once again.
Earlier this month data showed the region's economy shrank by 0.2% between April and June - the bloc's first decline since its creation in 1999. It said the 15-nation bloc would now grow by 1.3% this year, against previous projections of 1.7%.
Earlier this month, data showed the region's economy shrank by 0.2% between April and June - the bloc's first decline since its creation in 1999.
The contraction was driven by a slowdown in exports and consumer spending.The contraction was driven by a slowdown in exports and consumer spending.
But high inflation in the region saw policy makers at the European Central Bank keep interest rates at 4.25% at its latest meeting, allowing no relief for the eurozone's slowing economies. But high inflation in the region led policy makers at the European Central Bank to keep interest rates at 4.25% at its latest meeting, allowing no relief for the eurozone's slowing economies.
In the Commission's latest report, Economic and Monetary Affairs Commissioner Joaquin Almunia blamed ructions in the financial markets, soaring commodity prices and the housing slump for the gloomy outlook.
"In a context of an unusually high degree of uncertainty, the external headwinds not only had a direct adverse impact on inflation and capital costs, but also an indirect one on confidence," he said.